Is There Still A Place For Solvent Liquidations?

Following the increase in Capital Gains tax (“CGT”) from 6 April 2026 this leaves the question, is a solvent liquidation – Members Voluntary Liquidation (“MVL”) still a viable option for business owners?

MVLs are often used as part of a business closure plan, either at the end of a Company’s life or when the Directors/shareholders wish to retire. Over the past few years the number of MVLs has fluctuated, and peak statistics have often been driven by the rumours of potential tax increases around the time of Government’s budget announcements.

For basic rate tax payers (i.e. for income up to £50,270), the CGT rate from 6 April 2026 is 18%, rising to 24% for higher rate tax payers.

However where Business Asset Disposal relief can be claimed this CGT rate is 18%, thus creating a tax saving for higher rate tax payers.

A recent study of MVLs by the Insolvency Service found that in open MVL cases the average distribution to shareholders value was £127,552, exceeding the basic rate tax rate limit. As such, the tax relief from Business Asset Disposal would result in a saving for shareholders looking to take advantage of the MVL process.

Therefore, to answer the question posed at the start of this article – yes there is still a place for MVLs.

You can read more information about MVLs here, and please get in touch to discuss your company’s options.