Company closures soar ahead of tax rises as new Budget looms

Research into more than 21,000 solvent company liquidations reveals a rush to close businesses before changes to Capital Gains Tax, with activity falling by as much as 94 per cent immediately afterwards

Thousands of British business owners have rushed to close their companies ahead of tax increases, with solvent liquidations surging to nearly seven times their normal level before collapsing by 94 per cent immediately afterwards, new research has found.

The findings come just days before the Autumn Budget on 28 October, raising questions about whether uncertainty over future tax changes could trigger another rush among company shareholders.

Manchester-based insolvency firm Clarke Bell analysed 21,839 Members’ Voluntary Liquidation (MVL) resolutions between January 2024 and September 2026, examining how company closures changed around three major tax events.

An MVL allows the owners of a solvent company – one that can pay its debts – to close the business formally and distribute its remaining assets to shareholders. Qualifying distributions can benefit from Business Asset Disposal Relief (BADR), which reduces the Capital Gains Tax payable.

Its research found that 604 liquidation resolutions were passed in the five working days before BADR increased from 10 to 14 per cent in April 2025.

This represented 6.83 times the average daily activity recorded in January. Just 39 resolutions followed in the next five working days, a fall of 94 per cent.

A similar pattern emerged in April 2026, when the tax rate increased again, from 14 to 18 per cent.

Some 673 resolutions were recorded in the five working days before the change, equivalent to 6.41 times January’s average. Activity then fell by 93 per cent, with only 44 resolutions recorded in the following five working days.

The largest monthly total came in October 2024, when 2,760 resolutions were passed ahead of the Autumn Budget.

Of these, 1,092 occurred in the final five working days before the announcement, compared with 78 in the following five working days – a fall of 93 per cent.

Researchers also examined whether the spikes reflected the usual increase in company closures towards the end of the financial year.

They found that activity before the 2024 Budget was 3.38 times its normal level, with no comparable increase during the equivalent period in 2023.

The April 2025 and 2026 surges were also substantially greater than in April 2024, when the BADR rate remained unchanged.

John Bell, senior partner and licensed insolvency practitioner at Clarke Bell, said the consistency of the findings was particularly striking.

“What stands out is how consistent the pattern is. Ahead of the 2024 Budget and both BADR increases, MVL activity became heavily concentrated in the final few working days, then fell by 93 – 94 per cent immediately afterwards.”

He added: “The data cannot tell us why any individual shareholder acted when they did, but the timing is hard to ignore. With another Budget approaching, the previous three events show just how sharply behaviour can become concentrated around known fiscal deadlines.”

The findings suggest that business owners may be bringing forward decisions to close companies to avoid less favourable tax treatment, although the research cannot establish individual motivations or whether shareholders ultimately secured a lower tax rate.

Jason Piper, head of tax and business law at the Association of Chartered Certified Accountants (ACCA), said the findings illustrated the influence of tax deadlines on business decisions.

“Planning around deadlines is inevitable, and whenever there’s a timetable for tax reforms that will drive behaviours.”

He added: “With only the bare numbers, we can’t be sure about motivations, but it does suggest that tax is the driving factor in timing, and that’s not necessarily a good thing.”

The latest data also shows liquidation activity increasing through summer 2026, from an average of 11.5 resolutions per working day in May to a provisional 22 in September.

Clarke Bell said the pattern around previous tax changes raised the possibility of another increase in activity before next week’s Budget, although no further changes to BADR have been confirmed.

The study examined shareholder resolutions rather than completed liquidations or individual company owners, and the researchers stressed that the findings concerned solvent businesses rather than companies collapsing because of financial difficulties.

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_{Main image: Business owners are rushing to complete voluntary company liquidations ahead of tax increases, according to new research showing that closures of solvent businesses surged before previous tax deadlines, then fell by as much as 94 per cent immediately afterwards. Credit: RDNE Stock project via Pexels.}