Business insolvencies remain stable

Latest figures from the Insolvency Service have shown the number of business insolvencies in England and Wales increased by 1% in August 2026 when compared to the previous month, with 1,946 cases compared to 1,934 in July. August’s figure was 3% lower than the same month in 2025, when there were 2,007 cases.

The number of registered business insolvencies was 1,946 in August 2026.  The insolvencies consisted of 314 compulsory liquidations, 1,431 creditors’ voluntary liquidations (CVLs), 182 administrations and 19 company voluntary arrangements (CVAs). There were no receivership appointments.

CVLs accounted for 74% of all company insolvencies. The number of CVLs was lower than in both July 2026 and August 2025, while compulsory liquidations were higher than in both months. Administrations were 44% higher than in July 2026, and 60% higher than in August 2025.

The number of compulsory liquidations in August 2026 was 8% higher than in July 2026 and 5% higher than in August 2025. The average monthly number of compulsory liquidations in the first eight months of 2026 was 5% lower than the 2025 monthly average.

R3 President, Sonia Jordan, a Restructuring and Insolvency Partner at Knights, said “Today’s insolvency figures reflect a mixed economic picture with 1,946 companies entering insolvency in August, a similar figure to the previous month. There was a monthly spike in businesses entering administration of 44%, particularly in the real estate sector, which is likely due to the continuing fallout from the collapse of mortgage provider Market Financial Solutions. However, administrations typically result in better returns being made to creditors.

“The summer heatwave and World cup provided a boost for some sectors such as retail and the wider economy has also been supported by growth in the services and technology sectors, but many businesses continue to face rising costs. With oil and fuel prices increasing, pressure is growing on transport and energy-intensive sectors and directors remain cautious about investing or expanding.

“Recent employment figures suggest hiring activity is slowing, and announcements such as Jaguar Land Rover’s planned reduction of around 4,000 roles could have wider implications for businesses further down their supply chain and create knock-on effects in many regions. Where firms are heavily dependent on a single customer or sector, adapting quickly and seeking new opportunities will be critical.

“Directors will also be closely watching the latest inflation figures and the Bank of England’s warning that interest rates may need to rise. Higher borrowing costs continue to affect investment decisions and cash flow planning, particularly for small and medium-sized businesses that rely on external finance.”

Blair Milne, Restructuring and Insolvency Partner at international accountancy and business advisory group Azets, said “Corporate insolvency numbers hit a four-month high in August, driven by a rise in administrations as more than 250 connected companies in the Real Estate sector entered administration between March and August of this year. August also saw an uptick in Compulsory Liquidations, as creditors continue to chase down debt in an attempt to balance their own books and HMRC continues to pursue tax debts to recover money for the public purse.

“While the rise in numbers can be explained, there’s no denying it was a summer of sorrow for many firms as ongoing and long-running cost issues and uncertainty caused by the political and geopolitical climate met the heatwave and resulted in fewer customers, a drop in sales and an increase in the cost of keeping buildings, customers and staff cool from the heat.

“The summer also saw a number of big names enter insolvency processes and announce store or site closures, with TG Jones and the Beefeater just two examples of British brands that were once a staple of everyday life cutting their presence on high streets and disappearing from towns and roadsides, and big names like Aston Martin showing signs of struggle.

“The cost of living issues are now starting to take their toll on higher earners and this is hitting higher-end brands who had avoided its affects to date. With inflation, living and energy costs increasing and wage rises being few and far between, those on higher incomes are now likely to start shopping around and watching their outgoings more closely than they ever have, which will have an impact on premium brands in a way it hasn’t until now.

“From a sector perspective, retailers saw a monthly fall in sales and while volumes are up year-on-year, falling margins and rising costs – especially employment taxes – mean that this isn’t the good news retailers were hoping for and sorely needed.

“The construction industry continues to suffer from a lack of new work and rising material and wage costs carry on eroding margins and leave contracts agreed in better times walking a fine line between profitable and loss-making. For firms in this industry, whose profits have always been slim, these cost increases are pushing them closer towards financial distress.

“The hospitality industry has been hit hard by the hot weather as people stayed at home and hid from the heat in a month which is normally ripe for going out and spending money. With cooler weather expected, it will be interesting to see whether consumers get back into the habit of going out – and if they don’t, that could create further problems for a sector that’s struggling and which hoped the summer might provide a much-needed revenue boost to help pay for the increased costs of wages, heating and trading.

“Firms will also be keeping a watchful eye on rumours about next month’s Budget. Years of increased expenses combined with the wage, tax and Business Rates increases announced in the 2024 and 2025 Budgets have hit profits, growth and recruitment. With little time to prepare for Budget announcements taking effect, businesses will be hoping the Chancellor spares them from any further increases in costs as many have seen profits erode to a point of unsustainability.

“Our advice for anyone who is worried about their business is simple: pick up the phone and speak to an advisor. It is an incredibly difficult conversation to have, but seeking advice about your concerns gives you more options, more time to take a decision and a better chance of turning your situation around than if you’d waited until the issues became more severe and the window for decision making became shorter.”

Giuseppe Parla, Restructuring & Insolvency Director at Menzies LLP, said “Below the surface of an improving GDP, renewed conflict in Iran and its economic fallout continue to push up energy, fuel and supply chain prices, and inflation. For businesses already managing tight margins, these are pressures that are becoming increasingly difficult to absorb, which poses a significant threat to the British economy and risks further elevations in company insolvencies if left unresolved.

“While UK hospitality saw a summer uptick in confidence following a cut to business rates and record temperatures, sector costs continue to rise, compounding years of gradually increasing pressure on traders. Further uncertainty has been added to the mix by the announcement of the tourist tax, and ongoing debate over bans on ‘vertical drinking,’ both of which could risk decreasing pub, restaurant and hotel revenues, particularly in crowded cities.

“As we sit a month away from the Budget, many businesses are already holding their breath amid rumoured tax hikes and price rises which will determine their ability to break even in an unpredictable economic climate. All eyes now turn to the Chancellor to set out how this Government plans to restore confidence and financial stability, with firms looking for a defined roadmap that provides clarity on growth, tax pressures and shifting international trading rules. For some, this wait alone could be the difference between survival and failure.

“Seeking support is a difficult conversation to have, but as ever, our message to firms is to use the coming month to review their finances and take expert advice at the first sign of distress. Doing so early increases the chance that they will be ready to adapt to new economic conditions and policies, and opens more options to protect value, preserve jobs and secure long-term financial viability.”