Tax Policy Drives Entrepreneurial Liquidations

If you’ve been following UK business news over the last year, you’ll know there’s been a remarkable rise in voluntary liquidations, the highest we’ve seen since the pandemic. While insolvency statistics often climb during periods of economic stress, this latest spike isn’t purely down to businesses struggling. This time, tax policy is a big part of the story. Specifically, changes to Capital Gains Tax reliefs have prompted many directors, especially those with profitable, solvent companies, to act sooner rather than later. Here at Simple Liquidation, we’ve been speaking to more entrepreneurs than ever who are keen to close down now, not because they have to, but because it makes financial sense to do so before new rules bite.

The Link Between CGT Relief and Voluntary Liquidations

Capital Gains Tax applies when you sell or dispose of certain assets, including shares in your own company. For years, UK entrepreneurs have been able to benefit from Business Asset Disposal Relief (previously known as Entrepreneurs’ Relief), reducing the CGT rate to as low as 10% on qualifying gains up to a lifetime limit.

When HM Treasury signals that this relief might be tightened, for example, by lowering the lifetime limit, increasing the tax rate, or narrowing the eligibility criteria, directors take notice. The fear is simple. If you wait too long, you could end up paying far more tax when you eventually wind up your business and withdraw the profits.



That’s exactly what happened in the 2024–25 tax year.


Tax Policy Drives Entrepreneurial Liquidations in the UK


Location: Norwich, UK

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