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Since the pandemic, the number of UK entrepreneurs has voluntarily shut down viable businesses, the highest rate, with consultants raising the liquidation jump to tax rates.
In the 2024-25 tax year, interest in solvent companies surged, FIgures Published by Companies House Show.
These figures also indicate that overall liquidation rates, including voluntary and bankruptcy, have risen to record highs.
Voluntary closures (called voluntary liquidation of members) reached 12,602 in 2024-2025, the second highest of 14,929 liquidations conducted in 2020-2021 during the peak of the pandemic. The total number of all liquidations rose to 36,807 in 2025.
Several tax advisers told the Financial Times they asked about the voluntary liquidation after principal Rachel Reeves raised the tax rate with a fall budget with a primary relief rate for entrepreneurs.
A tax relief called corporate asset disposal relief, which allows owners to take money from the company at a lower tax rate before closing. Cash withdrawn from a company is classified as a capital allocation and taxed at a lower tax rate rather than income, with a maximum tax of 45%.
In last year’s budget, Reeves announced that the relief rate will rise to 14% from April 6, 2025. It will climb to 18% again next year.
“We have seen inquiries from business owners who want to sell before the April tax increase,” said Elizabeth Bradley, partner at the law firm BCLP. “Many of these businesses may have huge growth potential.”
Michelle Denny-West, a partner at accounting firm Moore Kingston Smith, added: “Announcement of tax increases [by Reeves] Last year, many business owners have scrutinized their options. Expectations for further tax increases later this year have convinced some of these “cash chips”, while current interest rates are still available.”
Her company also experienced “inquiries” before the end of the tax year on April 5 and “expected to see the same over the next 12 months.”
Tax experts at another accounting firm Price Bailey also reported a sharp increase in business closures since the October budget. “Taxes, together with economic headwinds, have prompted more business owners to explore the options they will take out cash. Many have decided to stop trading altogether,” said Matt Howard, head of the bankruptcy and recovery team at Price Bailey.
Advisors report that other factors are driving more entrepreneurs to end the company, including more difficult transaction conditions, increased costs and economic uncertainty. In some cases, people plan to retire in the next few years, but decided to speed up the decision to pay taxes at lower rates, the consultant said.
“It’s hard there,” Howard added. “It’s getting harder to run a business.”
“Sometimes they are just tired and have enough uncertainty and ups and downs,” said Denny-West. “A lot of the customers we see are [wanting an MVL] Just enough. They just want to get cash and run. ”
The Treasury said the government “implemented a temporary budget that made the necessary tax decisions to address public finances and rebuild the NHS.”
It said it recognized the “important role that entrepreneurs play in promoting economic growth” and added: “That’s why we need to maintain corporate asset disposal relief with a lifetime limit of £1 million”.
