Entrepreneurs' Relief and MVL: How to Close Your Company Tax-Efficiently in 2026

If you are closing a profitable UK limited company, the way you extract your retained profits can mean a difference of tens of thousands of pounds in tax. Most directors know about dividends. Fewer know about Members' Voluntary Liquidation (MVL) and the relief that used to be called Entrepreneurs' Relief, now officially Business Asset Disposal Relief (BADR).

This guide covers when an MVL makes sense, how the process works, what it costs, and how much you can save compared to simply paying yourself dividends or striking off at Companies House. Every figure uses 2026/27 tax rates.

The headline tax saving

Before going into detail, here is why this matters. Suppose your company has £100,000 of retained profits (after Corporation Tax) and you want to close the business and take the money out.

Route 1: Dividends. You pay yourself £100,000 in dividends. After the £500 dividend allowance, £99,500 is taxable. As a higher rate taxpayer, the dividend tax rate is 33.75%. Your tax bill: approximately £33,581.

Route 2: MVL with BADR. You appoint an insolvency practitioner, put the company into Members' Voluntary Liquidation, and claim Business Asset Disposal Relief. The distribution is treated as a capital gain. After the £3,000 annual exempt amount, £97,000 is taxable at the BADR rate of 18% (2026/27). Your tax bill: approximately £17,460.

The saving: £16,121.

At higher amounts the gap widens further. On £250,000 of retained profits, the difference can exceed £35,000.

This is why MVL combined with BADR is the standard exit route for any UK director closing a profitable company. But there are qualifying conditions, costs, and anti-avoidance rules that you need to understand before committing.

What is Entrepreneurs' Relief (Business Asset Disposal Relief)?

Entrepreneurs' Relief was introduced in 2008 to encourage business ownership by offering a reduced Capital Gains Tax rate when you sold or closed a qualifying business. In April 2020, the government renamed it Business Asset Disposal Relief (BADR) and reduced the lifetime limit from £10 million to £1 million.

Despite the name change, most people (and most search engines) still call it Entrepreneurs' Relief. HMRC itself uses BADR on all official guidance. Both terms refer to the same thing.

Key features of BADR in 2026/27

Feature	Detail
Tax rate	18% (up from 14% in 2025/26, 10% before April 2025)
Lifetime limit	£1,000,000 of qualifying gains
Standard CGT comparison	18% basic rate, 24% higher rate
Who qualifies	Shareholders who meet specific conditions (see below)

Note the BADR rate increase timeline. Before April 2025, the rate was 10%. The Autumn Budget 2024 introduced a two-stage increase: 14% from 6 April 2025, then 18% from 6 April 2026. At 18%, BADR now matches the basic rate of CGT, but it is still significantly cheaper than dividends for higher rate taxpayers and cheaper than the 24% higher rate of CGT for those who exceed the £1 million BADR limit on other gains.

For the full analysis of the April 2026 rate change, see Business Asset Disposal Relief Rising to 18% in 2026.

What is a Members' Voluntary Liquidation?

A Members' Voluntary Liquidation is a formal process for winding up a solvent company. The word "solvent" is key. An MVL is only available when the company can pay all its debts within 12 months. If the company cannot pay its debts, the process is a Creditors' Voluntary Liquidation (CVL), which is a completely different situation.

In an MVL, the directors appoint a licensed insolvency practitioner (IP) who takes control of the company, settles all liabilities, realises any remaining assets, and distributes the surplus to shareholders. The distribution is treated as a capital disposal for tax purposes, not as income. That is the critical point: it is a capital gain, which qualifies for BADR if you meet the conditions.

Why capital treatment matters

When you receive a dividend, it is taxed as income at dividend tax rates:

Tax band	2026/27 dividend rate
Basic rate (£12,571 to £50,270)	10.75%
Higher rate (£50,271 to £125,140)	33.75%
Additional rate (over £125,140)	39.35%

When you receive a capital distribution from an MVL and claim BADR, the effective rate is 18% regardless of your income level (up to the £1 million lifetime limit). For a higher rate taxpayer, that is a saving of 15.75 percentage points on every pound. For an additional rate taxpayer, the saving is 21.35 percentage points.

Even without BADR, a capital distribution is taxed at CGT rates (18% basic, 24% higher), which are lower than dividend rates for most directors.

MVL vs striking off: the £25,000 threshold

Not every company needs an MVL. If your company has relatively small retained profits, you can simply apply to Companies House to strike it off and make a final distribution to yourself.

However, HMRC has a critical threshold. If the total distributions to shareholders in the final two years before dissolution exceed £25,000, the entire distribution is reclassified as income (i.e. treated as a dividend), not as a capital gain.

This is the ESC C16 rule, now codified in legislation. The £25,000 limit applies to the total of all distributions, not per shareholder.

Decision framework

Retained profits	Recommended route
Under £25,000	Strike off at Companies House. Distribution is treated as capital. Simple, cheap, no insolvency practitioner needed.
£25,001 to £50,000	Grey area. MVL costs (£1,500 to £3,000+) eat into the tax saving. Run the numbers.
Over £50,000	MVL almost always the better route. Tax saving exceeds IP fees.
Over £100,000	MVL is clearly the right choice.

For a complete comparison of all the routes for closing a company, see Closing a UK Limited Company: Your Complete Guide.

Qualifying conditions for BADR on an MVL

BADR is not automatic. You must meet all of the following conditions at the time the company passes the winding-up resolution:

1. You must be a shareholder

You need to hold ordinary shares in the company. The shares must give you at least 5% of the ordinary share capital AND at least 5% of the voting rights.

2. You must be an officer or employee

You must be a director or employee of the company (or a company in the same trading group). For most owner-directors of micro companies, this is straightforward.

3. The company must be a trading company

The company must be a trading company or the holding company of a trading group. It must have been trading for at least two years before the date of the winding-up resolution.

"Trading" means actively carrying on a business. A company that has stopped trading and is just holding cash or investments may not qualify. HMRC looks at the nature of the company's activities. If more than 20% of the company's activities, assets, or income are non-trading (e.g. rental income, investment income), it may be classified as an investment company, and BADR would not apply.

4. Two-year qualifying period

You must have met conditions 1, 2, and 3 continuously for at least two years ending on the date the company passes its winding-up resolution (or in the case of a disposal, two years ending on the date of disposal).

5. Lifetime limit

The £1 million lifetime limit applies across all BADR claims you have ever made, not just this one company. If you have previously claimed BADR on selling shares in another company, the amount used reduces your remaining allowance.

Common disqualifying scenarios

Company stopped trading more than two years ago. If you wound down operations in 2023 but only start the MVL in 2026, you likely fail the trading condition.
Company is mainly an investment vehicle. If the majority of the balance sheet is investments, property, or cash that was never deployed in trading, HMRC may refuse the claim.
You hold less than 5%. If you have diluted your holding below 5% through share issues, you do not qualify.
You were not an employee or director. Sleeping partners or non-executive shareholders who have never been employed by the company do not qualify.

For more detail on the qualifying conditions, see Business Asset Disposal Relief Explained for UK Company Directors.

The MVL process step by step

An MVL is a structured legal process. Here is what happens at each stage.

Step 1: Decide to wind up (Week 1)

You decide the company should close. You have finished trading (or are about to), have collected all outstanding debts, and are satisfied the company can pay all its liabilities.

At this point you should engage an insolvency practitioner and an accountant (or use software like AccountsOS to prepare your final accounts). The IP will walk you through the process and confirm the company qualifies.

Step 2: Prepare final accounts and tax returns

Before the liquidation formally begins, you should:

File all outstanding Corporation Tax returns
File all outstanding VAT returns (if VAT registered)
Submit final RTI submissions for payroll
Prepare up-to-date management accounts showing the expected surplus

The IP will need sight of these. HMRC will also need a final CT600 covering the period up to the start of the liquidation.

Step 3: Directors' Declaration of Solvency (Week 2 to 3)

The directors (usually just you, if it is a single-director company) must make a statutory Declaration of Solvency. This is a formal sworn statement that the company can pay all its debts within 12 months of the liquidation commencing.

This declaration is made at a board meeting and must be filed at Companies House within five weeks.

Making a false Declaration of Solvency is a criminal offence. If the company turns out to be insolvent, the directors can be held personally liable.

Step 4: Shareholders' resolution (Week 2 to 3)

Within five weeks of the Declaration of Solvency, the shareholders must pass a special resolution to wind up the company voluntarily. For a single-shareholder company, this is a written resolution signed by you.

The resolution must be filed at Companies House within 15 days and advertised in the Gazette.

Step 5: Appoint the insolvency practitioner (same meeting)

At the same meeting (or within the resolution), you formally appoint the licensed insolvency practitioner as liquidator. From this point, the IP takes control of the company. You no longer have authority to act as a director.

Step 6: IP settles liabilities and realises assets (Weeks 3 to 12)

The insolvency practitioner:

Notifies HMRC of the liquidation
Settles all outstanding creditors (suppliers, HMRC, employees)
Collects any debts owed to the company
Sells any remaining assets (equipment, property, IP)
Closes the company's bank accounts
Deals with any remaining VAT or Corporation Tax matters

Step 7: Capital distribution to shareholders (Weeks 8 to 24)

Once all liabilities are settled and HMRC has confirmed there are no outstanding tax demands, the IP distributes the remaining funds to shareholders. This is the capital distribution that qualifies for BADR.

Most IPs will make an interim distribution relatively early (once the major liabilities are cleared) and hold back a retention for any remaining costs or unexpected claims. A final distribution follows once everything is wrapped up.

Step 8: Final meeting and dissolution (Month 3 to 6)

The IP calls a final meeting of shareholders, presents a final account of the liquidation, and files the paperwork at Companies House. The company is dissolved approximately three months after the final return is filed.

Typical timeline

Stage	Timeframe
Decision and IP engagement	Week 1
Declaration of Solvency	Week 2 to 3
Shareholders' resolution	Week 2 to 3
IP settles liabilities	Weeks 3 to 12
First capital distribution	Weeks 8 to 12
Final distribution	Months 3 to 5
Company dissolved	Months 4 to 6

The total timeline is typically three to six months. Simple MVLs with no complications (no property, no outstanding disputes, clean tax position) can complete in three months. Companies with property, ongoing contracts, or HMRC queries take longer.

Costs of an MVL

The main cost is the insolvency practitioner's fee. This varies depending on the complexity of the case and the size of the company.

Typical IP fee ranges (2026)

Company complexity	Typical IP fee (excl. VAT)
Simple (one director, cash only, clean accounts)	£1,500 to £2,500
Medium (multiple shareholders, some assets to realise)	£2,500 to £4,000
Complex (property, multiple entities, disputes)	£4,000 to £8,000+

Additional costs

Cost	Typical amount
Gazette advertisement	£80 to £100
Companies House filing	Included in IP fee
Final Corporation Tax return (accountant)	£300 to £800
VAT deregistration	Usually handled by IP
Statutory bond	£20 to £50

For a straightforward single-director company with, say, £100,000 of retained profits, total MVL costs are usually £2,000 to £3,000 including VAT. Given the tax saving of £16,000+ in that scenario, the return on the MVL cost is exceptional.

Worked examples: MVL vs dividends vs strike-off

Let us compare the three routes for three different levels of retained profits.

Example 1: £30,000 retained profits, higher rate taxpayer

Route A: Strike off (capital treatment)

Distribution: £30,000. This is over the £25,000 threshold, so HMRC will reclassify as income.

Actual tax treatment: dividend at 33.75% on £29,500 (after £500 allowance) = £9,956 tax.

Route B: Dividends

Same as Route A above. Tax: £9,956.

Route C: MVL with BADR

Distribution: £30,000 treated as capital gain. Less £3,000 annual exempt amount = £27,000 at 18% = £4,860 tax. IP fees: approximately £2,000 + VAT (£2,400).

Net position after tax and fees: £30,000 minus £4,860 minus £2,400 = £22,740.

Dividend route net: £30,000 minus £9,956 = £20,044.

MVL saving: £2,696. Marginal, but still worthwhile. Below about £35,000, the MVL cost starts to erode the benefit significantly.

Example 2: £100,000 retained profits, higher rate taxpayer

Route A: Dividends

Tax: £99,500 (after £500 allowance) at 33.75% = £33,581.

Net: £66,419.

Route B: MVL with BADR

Capital gain: £100,000 minus £3,000 AEA = £97,000 at 18% = £17,460. IP fees: approximately £2,000 + VAT = £2,400.

Net: £100,000 minus £17,460 minus £2,400 = £80,140.

MVL saving: £13,721 (after IP fees). The dividend route leaves you with £66,419. The MVL route leaves you with £80,140.

Example 3: £250,000 retained profits, additional rate taxpayer

Route A: Dividends

First £37,700 (to top of basic rate, assuming £12,570 salary): 10.75% = £4,053. Next £74,870 (to £125,140): 33.75% = £25,269. Remaining £137,430: 39.35% = £54,079.

Total dividend tax (approximate): £83,401.

Net: £166,599.

Route B: MVL with BADR

Capital gain: £250,000 minus £3,000 AEA = £247,000 at 18% = £44,460. IP fees: approximately £3,000 + VAT = £3,600.

Net: £250,000 minus £44,460 minus £3,600 = £201,940.

MVL saving: £35,341 after IP fees.

Even at the new 18% BADR rate, the saving is substantial for any distribution above £50,000.

What if BADR does not apply?

If you do not qualify for BADR (e.g. the company was not trading for two years), the MVL distribution is still taxed as a capital gain, but at standard CGT rates: 18% for basic rate, 24% for higher rate.

Using the £100,000 example with a higher rate taxpayer and no BADR:

Capital gain: £97,000 at 24% = £23,280. Plus IP fees £2,400.

Net: £74,320.

This is still better than the dividend route (£66,419) by £7,901. Even without BADR, the capital treatment of an MVL beats dividend extraction for most directors.

The Targeted Anti-Avoidance Rule (TAAR)

In 2016, HMRC introduced a Targeted Anti-Avoidance Rule specifically aimed at MVLs. The rule is designed to prevent directors from liquidating a company, taking the capital distribution, and then carrying on the same business through a new company.

When the TAAR applies

The TAAR applies when ALL of the following are true:

You received a capital distribution from a company that was wound up
Within two years of the distribution, you are involved in a similar trade or activity (directly or through another company)
It is reasonable to assume that one of the main purposes of the winding up was to obtain a tax advantage (i.e. capital treatment rather than income)
You are connected with the new company or activity

If the TAAR applies, the capital distribution is reclassified as a dividend, and you lose both the capital treatment and the BADR claim.

What "similar trade" means

This is the area that catches people out. If you run a web development consultancy, close it via MVL, and then set up a new web development consultancy six months later, the TAAR almost certainly applies. You are carrying on the same trade through a new vehicle, and HMRC will argue the purpose of the MVL was to extract profits at capital rates rather than genuinely closing the business.

However, the TAAR does not apply if:

You genuinely retire from the trade and do not carry on anything similar
You start a completely different business (different sector, different clients, different activities)
The winding up was driven by genuine commercial reasons (partner dispute, ill health, market exit) rather than tax planning

Practical guidance

If you are considering an MVL but plan to continue in a similar trade, take specialist advice before proceeding. The tax saving of an MVL is wiped out entirely if the TAAR is invoked, and you could face penalties and interest on top.

The safest position is that you are genuinely ceasing all business activity in that sector. If you intend to carry on, consider whether dividend extraction or a share sale might be more appropriate.

Phoenix company rules

Related to the TAAR, the phoenix company rules prevent directors from buying back the assets of a company in liquidation and carrying on the same business. While these rules primarily target insolvent companies, they can interact with MVLs if you intend to continue trading.

The key risk is that you liquidate Company A, take a capital distribution, and then form Company B to carry on the same business with the same clients. Even if Company A was solvent, this pattern raises red flags with HMRC.

Corporation Tax in the final period

Before any distribution, the company must pay Corporation Tax on its profits for the final trading period. This is important because retained profits are after-tax profits; the 25% Corporation Tax has already been paid.

Final CT600

The company's accounting period ends when it enters liquidation. The IP (or your accountant) must file a final CT600 covering the period from the last filed accounts to the date of the winding-up resolution.

Any capital gains the company makes during the liquidation (e.g. selling property or equipment above book value) are also subject to Corporation Tax at 25%.

Interaction with BADR

The effective total tax rate on company profits extracted via MVL with BADR is:

Corporation Tax at 25% on the profit
BADR at 18% on the distribution (which is the post-CT amount)

So on £100 of gross profit: the company pays £25 CT, leaving £75. You pay 18% of £75 = £13.50 in BADR. Total tax: £38.50, an effective combined rate of 38.5%.

Compare that to dividend extraction: 25% CT plus 33.75% dividend tax on £75 = £25.31. Total tax: £50.31, an effective combined rate of 50.3%.

The BADR route saves 11.8 percentage points on the combined effective rate. That is the real picture.

How to choose an insolvency practitioner

The insolvency practitioner is the single biggest cost and the person who controls the timeline. Choosing well matters.

What to look for

Licensed and regulated. The IP must be licensed by one of the recognised professional bodies: the Insolvency Practitioners Association (IPA), the Institute of Chartered Accountants in England and Wales (ICAEW), or one of the other approved bodies. Check their licence on the Insolvency Service register.

Experience with MVLs. Some IPs specialise in corporate recovery and insolvency. You want one with high volume MVL experience, not someone who mainly handles insolvent companies.

Fixed fee. Most MVL-specialist firms offer fixed fees. Avoid anyone quoting hourly rates unless the case is genuinely complex.

Clear timeline. Ask how quickly you will receive the first distribution and when the company will be dissolved. Good IPs commit to specific timeframes.

Communication. You will be dealing with this person for three to six months. Ask who your day-to-day contact will be and how they keep you updated.

Questions to ask

What is your all-in fixed fee including VAT, Gazette, and disbursements?
When will you make the first capital distribution?
What percentage will you retain against unknown liabilities?
How do you handle the HMRC clearance process?
Have you handled similar cases in my sector?

Where to find IPs

The Insolvency Service register: https://www.gov.uk/find-an-insolvency-practitioner
Referral from your accountant
MVL specialist firms (many advertise fixed-fee MVL services online)

VAT and MVL

If your company is VAT registered, you need to consider the VAT implications of the liquidation.

Deregistration

The company should deregister for VAT as part of the liquidation. The IP will usually handle this. The deregistration takes effect from the date of the winding-up resolution or the date you stop making taxable supplies, whichever is earlier.

Final VAT return

A final VAT return must be filed covering the period up to deregistration. This includes any VAT on asset disposals during the liquidation.

VAT on IP fees

The insolvency practitioner's fee is subject to VAT. The company can reclaim this VAT on its final return if it is still VAT registered at that point. This is worth noting, as it reduces the effective cost of the IP fee by 20%.

Pension contributions before MVL

Some directors consider making pension contributions from the company before entering MVL to reduce the distributable surplus and therefore the tax bill.

Employer pension contributions are deductible for Corporation Tax purposes, so a contribution reduces the company's CT bill and the amount available for distribution. However, there is no capital gains tax on the pension contribution itself (it grows tax-free in the pension wrapper).

This strategy works well when you have used up your BADR lifetime allowance or when you want to combine extraction routes: some via pension, some via MVL distribution.

The annual pension allowance for 2026/27 is £60,000 (or 100% of earnings, whichever is lower). You can also carry forward unused allowance from the previous three years.

Take specialist pensions advice before making large contributions, especially close to liquidation. HMRC may challenge contributions that appear to be motivated primarily by tax avoidance.

Timing considerations

End of tax year planning

If you are close to 5 April, timing the MVL distribution either side of the tax year boundary can affect which tax year the gain falls into. This is relevant if your income varies year to year or if you have capital losses to offset.

Using the annual exempt amount

The £3,000 CGT annual exempt amount applies per tax year. If the MVL straddles two tax years and you receive distributions in both, you may be able to use two annual exempt amounts. However, this depends on the timing of actual distributions, which the IP controls.

Interaction with other disposals

If you are also selling other assets (property, investments) in the same tax year, the capital gains stack. Your BADR-eligible gains are taxed first at 18%, and any remaining gains use your basic rate band before moving to 24%.

Plan the timing of the MVL alongside any other capital disposals. AccountsOS tracks your capital gains position and can flag timing opportunities. If you are planning your exit, read Dividend Timing Strategy for UK Directors for optimising the sequence of extraction.

Alternatives to MVL

An MVL is not the only way to close a company or extract value. Here are the alternatives and when they might be better.

Informal strike-off

Apply to Companies House to strike the company off the register. Free to apply. Works well for distributions under £25,000 (capital treatment applies automatically).

Above £25,000, the distribution is reclassified as income. This is the route for dormant or low-value companies.

See Closing a UK Limited Company: All Your Options Explained for the full process.

Selling the company

If the business has value as a going concern (client base, recurring revenue, brand, IP), selling the shares to a buyer may be more tax-efficient than liquidating. The buyer pays for goodwill, and you pay CGT on the sale proceeds (potentially with BADR if you qualify).

This is often the best outcome when the business has genuine going-concern value beyond just retained cash.

Capital reduction demerger

For more complex group structures, a capital reduction can be used to return value to shareholders without liquidation. This is a specialist area requiring legal and tax advice.

Dividend extraction over time

If you are not in a rush to close, you can extract profits over several tax years via dividends, using your basic rate band each year to minimise dividend tax. This is slower but avoids IP fees and the TAAR risk.

For a higher rate taxpayer, the annual "efficient" dividend (using the basic rate band above salary) is approximately £37,700 at 10.75%. If you have £150,000 to extract, this takes roughly four years of dividend payments.

Record keeping for your BADR claim

You will need to provide evidence to support your BADR claim. Keep the following:

Share register showing your holding and that it exceeds 5%
Articles of association confirming your shares are ordinary shares with voting rights
Employment records or board minutes confirming your role as director/employee
Trading evidence (invoices, contracts, management accounts) for the two-year qualifying period
Previous BADR claims (if any) to confirm you have lifetime allowance remaining
The winding-up resolution and Declaration of Solvency
Distribution statements from the IP

Your self-assessment tax return for the year you receive the distribution will include a capital gains section where you claim BADR. The gain goes on form SA108 (Capital Gains). You tick the box for Business Asset Disposal Relief and enter the qualifying gain.

AccountsOS keeps your financial records organised and can generate the reports your IP and accountant need to support the MVL process.

Common mistakes

1. Waiting too long after trading stops

BADR requires the company to have been trading for two years up to the date of the winding-up resolution. If you stop trading and let the company sit dormant, you risk breaching this condition. Start the MVL process promptly after deciding to close.

2. Exceeding the £25,000 threshold on strike-off

Directors sometimes pay themselves a "final dividend" of, say, £20,000 and then try to strike off with the remaining cash. If total distributions in the final 24 months exceed £25,000, the whole lot is reclassified as income. Do not try to game the threshold.

3. Ignoring the TAAR

The most expensive mistake. Taking an MVL distribution and then starting a similar business within two years can result in the entire distribution being taxed as income, plus interest and penalties.

4. Not claiming the annual exempt amount

The £3,000 CGT annual exempt amount is easily overlooked. It is a small amount but reduces your tax bill by £540 at the 18% BADR rate.

5. Forgetting previous BADR claims

If you have claimed BADR before (on a previous company sale, for example), the lifetime limit is cumulative. Check your previous self-assessment returns before assuming you have the full £1 million available.

6. Choosing the cheapest IP

The IP with the lowest headline fee sometimes takes the longest. Delays cost you in terms of tied-up capital and ongoing company costs (insurance, registered office, etc.). Focus on value and timeline, not just price.

Step-by-step checklist

Here is a summary checklist for the entire MVL process:

Confirm the company is solvent (can pay all debts within 12 months)
Confirm you meet all BADR qualifying conditions
Check your remaining BADR lifetime allowance
Prepare final management accounts
File all outstanding tax returns (CT600, VAT, PAYE)
Engage a licensed insolvency practitioner
Consider final pension contributions (if beneficial)
Directors sign Declaration of Solvency
Shareholders pass special resolution for voluntary winding up
IP takes control and settles all liabilities
First capital distribution (usually within 8 to 12 weeks)
Final distribution after HMRC clearance
Claim BADR on your self-assessment tax return
IP files final return at Companies House
Company dissolved (approximately 3 months after final return)

Frequently asked questions

Can I still claim Entrepreneurs' Relief?

Yes, but it is now called Business Asset Disposal Relief (BADR). The relief still exists and works the same way. The rate has increased from 10% to 18% (as of April 2026), and the lifetime limit is £1 million. When you hear "Entrepreneurs' Relief" and "Business Asset Disposal Relief", they refer to the same thing.

How much does an MVL cost?

For a straightforward single-director company, expect to pay between £1,500 and £3,000 plus VAT for the insolvency practitioner's fee. Additional costs include the Gazette advertisement (approximately £80 to £100) and your accountant's fee for the final Corporation Tax return (£300 to £800). Total all-in costs are typically £2,000 to £4,000 including VAT.

How long does an MVL take?

Most MVLs complete within three to six months. Simple cases with no property, no outstanding disputes, and a clean tax position can finish in three months. More complex cases with HMRC queries, assets to sell, or multiple shareholders can take up to six months or longer.

What happens if my company owes money?

An MVL is only available for solvent companies. If your company cannot pay all its debts within 12 months, you need a Creditors' Voluntary Liquidation (CVL) instead. Making a false Declaration of Solvency is a criminal offence, and you could be held personally liable for the debts.

Can I start a new business after an MVL?

Yes, but be very careful about the Targeted Anti-Avoidance Rule. If you start a similar trade within two years, HMRC can reclassify your capital distribution as income, wiping out the entire tax saving. If you plan to continue in a different sector or genuinely retire, the TAAR is not an issue.

Do I need an accountant as well as an insolvency practitioner?

The IP handles the liquidation process, but you still need someone to prepare the final Corporation Tax return and your personal self-assessment (including the BADR claim). Some IP firms offer an all-in service; others expect you to use your own accountant. AccountsOS can help prepare the financial data both the IP and accountant need.

What if I have multiple shareholders?

The MVL process is the same, but each shareholder claims BADR independently. Each shareholder must individually meet the qualifying conditions (5% shareholding, two-year qualifying period, officer/employee status). The distribution is split according to shareholding.

Is an MVL worth it at the new 18% BADR rate?

Yes, for most directors with more than £50,000 of retained profits. The 18% BADR rate still saves significant tax compared to dividend extraction at 33.75% (higher rate) or 39.35% (additional rate). On £100,000 of retained profits as a higher rate taxpayer, the MVL route saves approximately £13,700 after IP fees. The break-even point (where IP fees equal the tax saving) is around £30,000 to £35,000 of retained profits.

Next steps

If you are considering closing your company, start by understanding your full financial position. Know your retained profits, outstanding liabilities, and tax position.

AccountsOS gives you a real-time view of your company's finances, including profit and loss, balance sheet, and tax estimates. Ask Finn (our AI assistant) to summarise your position, or upload your latest bank statements and let AccountsOS categorise everything automatically.

Get started with AccountsOS and see exactly where your company stands before making the decision to close.

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