According to official data by the Insolvency Service, business insolvencies have soared to their highest levels in April compared to July 2024 and companies are being hit with higher taxes thanks to the Chancellor’s Autumn Budget.
In England and Wales insolvencies rose by 3% to 2,053 in April but remains down 5% compared to the same period last year.
Rachel Reeves increased employer’s national insurance and raised the minimum wage which has hit businesses hard, and some companies have put in place a pay and employment freeze, many are planning mass redundancies.
Creditor’s voluntary liquidations which have seen shareholders of business owners choose to close the business hit 1,544 in the period.
Tom Russell, president of R3, the UK’s insolvency and restructuring trade body, said, “creditors’ voluntary liquidations remain the process companies most commonly enter into – and their consistently high numbers reflect the ongoing challenges, high costs and political and economic uncertainty businesses face – and the toll these are taking on their finances and their confidence in their ability to turn their situation around.
“Compulsory liquidations have also hit their highest level in more than five years as creditors chase down unpaid debts in an attempt to meet their own payment deadlines – led by the HMRC as the Government attempts to balance the national books.”
Jo Hewitt, a senior managing director at FTI Consulting, said, “Whilst corporate insolvency rates showed a slight increase of 3% compared to March 2025, it is too early to tell if businesses in England and Wales will be resilient to the recent market volatility and tariff uncertainty as the full impact on companies and their supply chains will take a while to play out.
“Although this month’s interest rate cut may provide a welcome reprieve for over-leveraged borrowers, we anticipate that external headwinds, such the rise in employer’s national insurance contributions and falling oil prices, together with the continued geopolitical uncertainty will drive financial distress in certain sectors over the coming months.”
