Business insolvencies rise by 5%

Latest figures from the Insolvency Service have shown that the number of business insolvencies in England and Wales was 1,931 in July 2026, 5% higher than in June 2026 (1,847) but 5% lower than the same month in the previous year (2,031 in July 2025).

The business insolvencies in July 2026 consisted of 288 compulsory liquidations, 1,497 creditors’ voluntary liquidations (CVLs), 124 administrations and 22 company voluntary arrangements (CVAs). There were no receivership appointments.

In July 2026, CVLs accounted for 78% of all company insolvencies. The number of CVLs was 9% higher than in June 2026, and 3% lower than in July 2025. The average monthly number of CVLs in the first seven months of 2026 was 7% lower than the average monthly number in 2025.

The number of compulsory liquidations in July 2026 was 4% higher than in June 2026 and 11% lower than in July 2025. The average monthly number of compulsory liquidations in the first seven months of 2026 was 6% lower than the 2025 monthly average.

The number of administrations in July 2026 was 33% lower than in June 2026, when approximately 60 connected companies in the real estate sector entered administration, and 19% lower than in July 2025. The average monthly number of administrations in the first seven months of 2026 was 33% higher than the 2025 monthly average. This was driven by higher numbers in March, April and June 2026, when approximately 260 connected companies in the real estate sector entered administration.

Commenting on the Insolvency Service’s latest monthly statistics for England and Wales, R3 President, Sonia Jordan, a Restructuring and Insolvency Partner at Knights, said “Businesses came under renewed pressure in July as corporate insolvencies increased by 5% month-on-month to 1,931. While the number of insolvencies was still below the level recorded a year earlier, the rise suggests many firms are still suffering from the impact of the uncertain economic environment.

“The increase in corporate insolvencies comes against a backdrop of a mixed economic picture. Although the UK economy grew by 0.4% in the three months to June, job vacancies are at a five-year low according to ONS figures, with small firms citing labour and operating costs as reasons for scaling back hiring.

“Many companies continue to operate on thin margins and will be hoping recent government measures, including the Prime Minister’s proposed cut in business rates for pubs, clubs and live music venues, provide much-needed financial breathing space.

“Such announcements will be welcomed by those sectors, but it will not help all of the areas where distress is most acute. Construction and manufacturing, both of which feature among the six industries with the highest insolvencies in July, will be looking to the autumn Budget for further targeted support.

“Meanwhile, measures in the Employment Rights Act 2025, could further increase labour costs at a time when SMEs are feeling the pressure from higher wages, energy bills and borrowing costs.”

Andy McGill, Restructuring and Insolvency Partner at Azets, said “For an increasing number of firms, July was the month where the cost of doing business became too heavy. In a climate where expenses continue to rise and debts continue to be chased, an increasing number of directors ran out of road and more businesses ran out of time and options. The main driver of July’s rise in corporate insolvency numbers was Creditors’ Voluntary Liquidations, which rose to the second highest number this year, and a small increase in Compulsory Liquidations. Administration numbers were also down month-on-month, which shows rescue was an option for fewer firms by the time they sought insolvency advice.

“While numbers are lower this month than they were a year ago, we should remember that July 2025’s figures reflected the impact of the increases in National Minimum Wage and Employer National Insurance, which resulted in a rise in insolvencies as businesses found themselves unable to absorb those increased costs after years of soaring expenses and shrinking margins.

“Corporate insolvencies continue to be driven by a mixture of high costs, cautious consumer and customer spending, political and geopolitical uncertainty, and creditor aggression. Businesses are operating in a world where everything costs more, people are spending less, and creditors are turning to the courts if bills are paid late. This is leading to more of them seeking advice and support with their financial and cashflow issues.

“HMRC has been assertive in chasing down overdue tax debts and has used winding-up petitions to force payment of overdue bills for some time now. However, they have increased their use of this in recent months in an attempt to more aggressively recover funds for the public purse. Private sector creditors have followed suit and are now going after debts with a ferocity that is driven by fear of facing the same cashflow issues and pressure from those they owe money to.

“Many directors are running out of options, ideas and energy and are choosing to close down their businesses.  This is because they don’t have any alternative options  and they don’t believe the situation can or will improve enough in the short-term for them to turn things around.

“The change of Prime Minister and the ongoing effects of the conflict in the Middle East have hit incomes, hiring and confidence hard. This is affecting borrowing costs and availability at a time when many firms are in need of rescue finance to allow them to trade through challenging times.

“There has been some good news in the retail industry in recent weeks but sales increases are based on volume rather than value. With online shopping growing at the expense of traditional retail stores, and hot weather pushing up energy bills as businesses try to keep shoppers cool, margins remain tight at a time when retailers badly need a financial shot in the arm.

“We’re hearing the residential property sector is struggling as the housing market has declined and companies that based their business models on prices increasing find themselves overloaded with debt. With flats, in particular, struggling to sell and losing value in some parts of the country, this is hitting property companies hard and pushing them into the red.  

“The construction sector is also continuing to struggle with increased wage bills, shrinking margins, delays in projects starting and legacy contracts whose slim profits have eroded to the point they become losses. Firms who survived and even made a profit on these kinds of arrangements historically are now seeing these slim margins eroded to the point where they have no alternative but to seek the support of insolvency specialists as their business models has become unsustainable.”

Giuseppe Parla, Restructuring & Insolvency Director at Menzies LLP said “Businesses are holding till Autumn to decide whether they can afford another year of trading:
“Britain’s business crisis has been formed by a decade of policy reversals adding a 70% rise in overheads to bottom lines, as compounding cost pressures and geopolitical shocks continue to drive UK firms to the brink. Retail, hospitality and leisure businesses have absorbed these costs while trading through weaker demand, tariffs and an energy crisis, while inflation still holds above the Bank of England’s 2 per cent target.

“A business rates cut for pubs, clubs and live music venues, alongside a signal to “do everything possible” to lower costs ahead of an early Budget, is a step in the right direction for struggling sectors, though its impact remains frozen until the 2027 tax year. What it fails to address is the multiplier applied to property values, which is in urgent need of redress. Rents have grown fastest in the South, so businesses that sat below the current RHL threshold have crept beyond it and now find themselves paying the highest rate in the system. A restaurant in central London can breach £500,000 in rateable value on rent alone, while the same branch in Manchester currently pays significantly less in tax.

“If the Prime Minister intends to rebalance what businesses across the country pay, this threshold is where he should look first. Support that is meant to revive the high street is not reaching the firms already paying the most to hold their property on top of rising energy, wage and overhead costs. Revisiting this policy would do more for independent operators and service sectors in cities where demand is highest, more so than another discount stacked on existing delayed relief.

“With the Autumn Budget fast approaching, all eyes turn to the Chancellor to set out how this Government plans to restore confidence in what remains a challenging economic environment. Many firms will be holding out for positive signals before deciding whether to continue trading, and unfavourable terms could push insolvencies higher still. Our message to firms is to use the coming months to review your financial position and take expert advice at the first sign of distress. Doing so provides more options to protect value, preserve jobs and secure long-term financial stability.”

Simon Edel, Financial Restructuring Partner at EY-Parthenon, said “After two consecutive monthly falls, the latest uptick in company insolvency activity, albeit modest, is another reminder of the challenging trading environment that UK businesses are operating in.

“As well as rising costs, cautious consumers and tighter credit conditions, companies are also contending with policy uncertainty both domestically and abroad, creating additional volatility around investment and planning decisions.

“This sustained period of uncertainty is likely to embed a risk premium in exposed markets, with our latest analysis of UK profit warnings finding that pressure is concentrating in the travel and leisure, housebuilding and retail sectors in particular. Many companies will adapt and thrive despite this backdrop, but resilience will depend on leaders continually reassessing their operating models, liquidity and strategic priorities in a lower-growth, higher-cost and less predictable environment.”