Business insolvencies rose by 7% in March

Latest figures from the Insolvency Service have shown that the number of business insolvencies in England and Wales increased by 7% in March 2026 when compared to the previous month. and were on similar levels to March 2025.

March’s increase suggests that oil price spikes and renewed inflation concerns linked to escalating conflict in the Middle East risk have added further pressure to companies already struggling with elevated costs and complexity, with new tax pressures also set to compound the pressure.

The data showed that there were 2,022 business insolvencies. The insolvencies consisted of 299 compulsory liquidations, 1,468 creditors’ voluntary liquidations (CVLs), 235 administrations and 20 company voluntary arrangements (CVAs). There were no receivership appointments. 

In March 2026, CVLs accounted for 73% of all company insolvencies. The number of CVLs was similar to February 2026, but was 6% lower compared to the same month last year (March 2025). Compulsory liquidations

The number of compulsory liquidations in March 2026 was 18% higher than in February 2026 and 4% higher than in March 2025. Compulsory liquidations in March 2026 were 4% lower than the 2025 monthly average.

There were 235 administrations in March 2026, 52% higher than in February 2026, 82% higher than in March 2025, and 89% higher than the 2025 monthly average. More than 100 connected companies in the Real Estate sector entered administration in March 2026, so this increase may be a one-off event rather than reflecting the underlying trend in administration numbers.

There were 20 CVAs in March 2026, this was twice as high than in February 2026 and 18% higher than in March 2025. Numbers remain low compared to historical levels.

Tom Russell, R3 President said “Corporate insolvencies increased by 7% in March, compared to the previous month, rising to 2,022 cases, although numbers were at similar levels to March 2025. These consisted of 299 compulsory liquidations, 1,468 creditors’ voluntary liquidations (CVLs), 235 administrations and 20 company voluntary arrangements (CVAs).

“Administrations were 52% higher than the previous month, in part explained by 100 connected companies entering administration in the Real Estate sector.

“Just as business and consumer confidence was starting to improve, the economic fallout from the Middle East conflict, in particular higher fuel and energy prices, are putting a financial squeeze on UK businesses and households alike.

“While it may be too early to see the full impact of the worsening economic situation in the formal insolvency statistics, energy and fuel costs have risen significantly, and for many businesses this has come at the same time as customers are becoming more cautious with their spending. That combination is extremely challenging, particularly for businesses with limited financial headroom.

“Manufacturers, particularly those companies with energy‑intensive operations, have been hit hard by rising gas and electricity prices. Recent high‑profile cases have highlighted these challenges, with well-known ceramics manufacturer, Denby Pottery, citing rising energy costs as a key factor in its decision to call in administrators.

“At this stage, businesses can no longer assume that conditions will quickly return to normal. Many will need to start putting contingency plans in place. R3 members are increasingly expecting to see greater demand for professional support as businesses adjust to the reality of a more prolonged period of financial pressure.”

Giuseppe Parla, Restructuring & Insolvency Director at Menzies said “The geopolitical “backdrop” is now one of the most significant threats to UK business stability. Ongoing tensions in the Middle East are driving up energy and fuel costs, disrupting supply chains, and keeping inflation stubbornly above the Bank of England’s 2% target. The UK economy is expected to be among the most exposed in the developed world – yet much of this impact has not yet filtered through to company balance sheets or the latest insolvency data.

“Compounding this, the new tax year has brought a fresh wave of cost pressures. While there have been no headline rate rises, frozen thresholds, reduced reliefs and tighter allowances are quietly intensifying ‘fiscal drag’ – steadily increasing the tax burden on both businesses and consumers. Together, these twin pressures are squeezing margins and suppressing demand which risks driving more businesses into the red.

“This combination means we are likely at the foot of a mountain of insolvencies, rather than sitting at its peak. With cost pressures still building, consumer demand under strain, and uncertainty persisting, insolvency numbers are likely to remain elevated, or rise further, in the months ahead, posing a serious threat to the wider British economy.

“Our message to businesses is clear: act early if you’re anticipating financial difficulty. Taking expert advice at the first sign of pressure ensures more options are open to help resolve troubles, help to protect value, and secure long-term financial stability.”

Derek Ryan, CEO for North West Europe at international SME funder Bibby Financial Services: said “The latest insolvency figures show how tough trading conditions remain for UK businesses. Bad debt, late payment and tight cashflow are already causing serious problems for many SMEs. Rising energy costs linked to the Iran conflict are likely to add further strain.

“Our research shows how fragile cashflow has become. UK SMEs are owed an average of £66,770 in unpaid invoices, up 10% on last year. Nearly a third have had to write off around £30,000 over the past year because customers went bust or failed to pay. For many firms, a single missed payment could be enough to tip them into trouble.

“The Government has started to address late payment, but progress needs to be faster. Soaring business costs also need urgent attention this year, or insolvencies are likely to rise further.”

Linton Bloomberg, Partner, Reed Smith said “The rise in insolvencies from last month is a stark reminder that the pressures bearing down on businesses show no sign of relenting. Lacklustre economic data and forecasts, compounded by the fallout from continuing geopolitical upheaval in the Middle East, continue to squeeze company finances. This is eroding both business and consumer confidence, and making trading conditions increasingly difficult.”

“Insolvency levels remain stubbornly elevated as companies find themselves buffeted by pressures from all directions. With the situation in the Middle East threatening to push energy prices higher still, businesses in energy-intensive sectors such as construction and manufacturing face particular vulnerability. The growing expectation that interest rates will hold at current levels, or even climb further, is another blow to the many businesses that had anticipated rate cuts and factored this into their budgets and forecasts for 2026.”

“The UK economy is particularly exposed to the impacts of the conflict, with the IMF recently downgrading Britain’s economic prospects more so than any other major economy because of it. Some impact was inevitable as it is difficult to imagine a scenario where businesses will be able to withstand the higher fuel, logistics and manufacturing costs without passing them on to customers. This is at a time when customers are still feeling the impact of the cost of living crisis.

“How long the cost of oil stays high will be key as to how great the impact will be to businesses.”

Matthew Richards, Joint Head of Restructuring & Insolvency at international accountancy and business advisory group Azets, said “The monthly and yearly rise in corporate insolvencies is mainly due to an increase in Administrations, which the Insolvency Service states is largely the result of 100 connected companies entering an administration. However, this doesn’t hide the fact that the trading climate remains tough, creditors remain very willing to turn to the courts to secure payment of debts, and an increasing number of directors are seeking advice about their finances as they fear they will not be able to survive the economic aftershocks of the war in Iran.

“The conflict in Iran is already taking a toll on businesses and balance sheets across the UK. Directors who were previously surviving have been concerned about the impact the war will have on their finances, and the increase in costs it caused has been the tipping point for many firms. The longer this carries on, the bigger impact it will have on margins, access to finance and affordability of funding, as well as consumer spending as households attempt to manage their own costs and cut back on anything that isn’t essential.

“With the war likely to continue, cost pressures continuing to be a problem and additional expenses like the new business rates and the changes to national minimum wage taking effect this month, it’s very likely demand for insolvency support will increase in the coming months.

“Businesses have been battling to survive since the start of the pandemic and for many firms, this triple whammy of geopolitical issues, increased costs due to changes in legislation and years of trading through tough times could be too much for them to manage.

“The IMF economic forecast is also a prediction of the effect the war will have on businesses, and with consumers facing war-related cost increases and hikes in a series of taxes and bills at a time when money is tight, they are likely to cut back even further which will be another blow for them, for companies, supply chains and the economy at a time when everyone badly needed a boost.

“From a sectoral perspective, while retailers have benefitted from the Easter Bank Holiday, the reality is that no one is sure whether rising volumes are driven by inflation or sales, and consumer caution around spending is likely to hit this businesses in this industry and hospitality at a time when they really needed a boost.

“Construction firms are also suffering as the Iran conflict has increased costs and hit client confidence and willingness to commission work, while February’s poor weather has hit live and planned projects, which will affect firms across the supply chain.

“And in the car sector, the public’s growing appetite for electric vehicles is hitting those across the supply chain whose business involves traditional cars, with sales of battery and hybrid electric vehicles coming at the expense of those that ran on diesel or petrol.

“The positive in this is that the SME community remains resilient, with clients aware of the importance of taking decisive action at the signs of distress and being so close to the coalface they can see any issues that arise as early as possible.

“In the current climate, seeking advice as soon as your business appears distressed is the best step you can take – it gives you more options to improve your situation and more time to take a decision about you next step. Lengthening creditor days, rising stock or nervousness about paying staff, suppliers, or taxes are signs something is starting go wrong – and that is time to seek advice from a specialist.”

Oliver Collinge, Partner at PKF Littlejohn Advisory UK LLP, said  “The recent increase in company and individual insolvencies highlights the ongoing financial pressures facing both individuals and businesses across the UK. Company insolvencies rose to 2,022, up 7% month-on-month and in line with March 2025 levels. The March increase was driven in part by more than 100 connected companies in the real estate industry entering administration, with pressures remaining broad-based across core trading sectors. Without these connected companies, the insolvency figures would be less drastic, but would still signify a slight rise for the month.

“Against this backdrop, it is essential for companies to remain vigilant and take proactive steps if challenges arise. With continued pressure from costs, creditor demands, and the wider economic climate, seeking professional advice at an early stage can significantly improve the range of available options and help mitigate more serious outcomes.”