22OCT

Company insolvency rate falls below 50

2 min read

16:23UTC

The company insolvency rate in England and Wales fell to 49.9 per 10,000 companies in the year to September, its first reading below 50 in the series this desk has tracked since June.

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Key takeaway

The company insolvency rate fell to 49.9 per 10,000, 10.1 below the 60.0 trigger set in July.

The company insolvency rate in England and Wales fell to 49.9 per 10,000 companies in the 12 months to September, from 52.8 a year earlier, the Insolvency Service said on 20 October⁠¹. It is the first reading below 50 in the series this desk has tracked since June, after 50.3 in July and 50.1 in August. That is about 44% of the 2008-09 peak of 113.1, and 10.1 below the 60.0 trigger this desk set in July for corporate distress.

Administrations, where an insolvency practitioner takes over to rescue or sell a business, fell 20% on the year to 102. August's 60% rise, inside a cluster of more than 250 connected real-estate firms, has not repeated.

Compulsory liquidations, the court-ordered winding-ups that creditors force, went the other way, rising on the year to 341. Fewer failing firms leave the Treasury a steadier base of company and payroll taxes to draw on as the Budget nears.

Deep Analysis

In plain English

When a company cannot pay its debts it can enter a formal insolvency process. The Insolvency Service counts these as a rate for every 10,000 companies. The rate has dropped below 50 for the first time since this desk began tracking it in June. That is well under half the level seen in the 2008-09 financial crisis. In an administration, an expert takes over to try to rescue or sell the business. In a compulsory liquidation, a court orders the company to close, usually because a creditor demanded it. The first fell this year while the second rose.

Deep Analysis

Root Causes

The rate counts insolvencies against the number of active companies, which has grown with small online and one-person firms. A larger base can lower the rate even if the count of failures holds steady.

Administrations are mostly used by larger firms with assets worth saving, while compulsory liquidations hit smaller firms that owe money to creditors willing to go to court. The two moving in opposite directions points to strain concentrated among small businesses.

What could happen next?

Meaning
Company distress is easing overall, giving the Treasury a steadier base of business tax receipts before the Budget.
Risk
Rising compulsory liquidations suggest smaller firms remain under pressure, which could feed into job losses in labour-heavy sectors.

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: Company insolvencies in England and Wales reached 25,158 in 2023, the highest annual count since 1993, as pandemic support ended and interest rates rose. Much of the weakest stock of firms failed then, which lowers the pool at risk now.

Counter-parallel: Through the 2010s near-zero interest rates let many weak companies keep servicing their debts, and insolvency rates stayed low for years. Low failure rates then came from cheap money rather than strength, and the Bank Rate of 3.75% today removes that cushion.

Immediate: at 49.9 the rate sits 10.1 below the 60.0 company trigger chosen in July, against a gap of 2.0 for the household rate.

Structural: fewer company failures protect corporation tax, VAT and payroll tax receipts. Employer National Insurance changes and higher wage floors still weigh on Labour-heavy sectors such as hospitality and retail, where payroll numbers have fallen.

Consensus view: The Insolvency Service's series shows company distress easing since June, from 50.5 then and 50.3 in July to 49.9, with administrations down 20% to 102.

August's rise in administrations sat inside one cluster of more than 250 connected real-estate firms, not a broad wave.

Counter-view: Compulsory liquidations rose on the year to 341, and HM Revenue and Customs is historically one of the most frequent petitioners for court winding-up orders. A rise in forced closures can show tax collectors chasing arrears even while voluntary failures fall.

Key tension: Whether a falling rate reflects healthier firms or a smaller pool of weak firms after the failures of 2023 and 2024 already cleared them out.

Sources:Insolvency Service

Mentions:Insolvency Service →England →Wales →Bank Rate →HMRC →Employer National Insurance contributions →

First Reported In

Update #5 · Debt passes £3trn, its ratio below forecast

Insolvency Service· 22 Oct 2026

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Causes and effects

Caused by

Company failures ease to one in 199

The company rate fell below 50 after the 50.3 reported for July.

Occurred 18 Aug 2026

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This Event

Company insolvency rate falls below 50

Fewer company failures steady the corporate tax base the Treasury draws on before the Budget, though compulsory liquidations rose.

Different Perspectives

Pension Protection Fund

Acting chief actuary Aaron Pang put the rise to 135.0% funded down to liabilities falling 2.1% against a 1.0% fall in assets, reflecting higher gilt yields. On Lowdown's reading, the yields that lift the Treasury's interest bill leave 4,838 company schemes with a £280.7bn surplus that does not reduce state borrowing.

Torsten Bell

The Labour figure wrote on 14 October that the IMF's October figures show the fastest fiscal consolidation in the G7. The IMF forecasts the UK deficit falling from 3.8% of GDP in 2026 to 1.4% in 2031, a squeeze still to be delivered through taxes and spending.

Tax Justice UK

The left-leaning campaign group says ten tax reforms would raise over £60bn a year for public services, and on 22 October asked why higher taxes on extreme wealth remain politically difficult. It offers the tax-led exit to the IEA's cuts; the £60bn is its own claim, not an official costing.

Institute of Economic Affairs

The free-market think tank's Alternative Budget of 19 October would suspend the state pension triple lock for three years, freeze welfare in cash terms and move tax onto a wider VAT. It claims the day-to-day budget returns to surplus in 2027-28, its own projection rather than an official costing.

Resolution Foundation

The living-standards think tank said welfare spending ran about £2.5bn above expectations in September, City AM reported on 21 October, and its economist Greg Thwaites urged targeted energy support. Its figure lands as a Chancellor who calls welfare cuts a moral duty finalises the 28 October Budget.

Institute for Fiscal Studies

Director Helen Miller said a steady-as-she-goes Budget is not an option, with the IFS putting 2029-30 headroom at about £20bn, The Independent reported on 12 October. The IFS puts the cost of avoiding cuts and funding higher defence at around £35bn of tax rises or benefit cuts, more than any headroom estimate in circulation.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.