Business insolvencies rose in April to their highest level since July last year after firms faced fresh tax increases, according to official data.
Registered company insolvencies in England and Wales grew by 3% to 2,053 in April compared with the previous month, the Insolvency Service revealed.
It was, however, still down 5% against the same period last year.
Insolvencies have been ticking higher in recent months as UK companies have raised concerns of uncertain economic conditions and an increased tax burden.
Last month, businesses saw their labour costs particularly jump after the Labour Government increased National Insurance contributions and put up the national minimum wage.
Creditors’ voluntary liquidations, where owners or shareholders in a company choose to fold it, were the most common insolvency, with 1,544 for the month.
There were also 379 compulsory liquidations, where the firm is forced to fold, representing the highest number for about five years.
Analysts have suggested the rise has come as the taxman increasingly seeks to recover unpaid debts in order to help boost the state’s finances.
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.”
It came as separate figures showed that the number of people going financially insolvent in England and Wales jumped by 8% in April.
