Are you a business owner? Then you’ll want to be aware of the 2025 budget changes and how they may affect your business. In this blog, we’re looking into how the 2025 budget changes impact business liquidation decisions.
The most recent budget took place just a few days ago, giving us a great idea of what to expect.
What are the budget changes?
Some businesses may face increased costs depending on their sector, while others, particularly small retail, hospitality and leisure businesses, may benefit from reduced business-rate multipliers. Additionally, many companies are experiencing higher general operating costs due to wider economic pressures.
Many businesses continue to feel long-term pressure from pandemic-era debt, including bounce-back loan repayments, which may influence decisions about the future.
Many companies had to close their doors for good as a result of the pandemic, as they saw no hope of recovery, even with business support.
Business Asset Disposal Relief
Since April 6th, 2025, Business Asset Disposal Relief has been at 14%. From April 6th, 2026, this is set to rise to 18%.
Capital Gains Tax Changes
The rates of Capital Gains Tax have also been adjusted. The basic rate stands at 18% and the higher rate is 24%.
Anti-Avoidance Measures
The government continues to focus on tackling tax avoidance and phoenix-type activity, which may increase scrutiny in certain liquidation cases.
Budget 2025 business impact
All of these changes listed above have a significant impact on companies operating in England.
Changes to Business Asset Disposal Relief mean that business owners may be less likely to use a Member’s Voluntary Liquidation to close their companies when these plans take effect. This method can be used by solvent companies that can afford to pay off all outstanding debts by a specific date.
An MVL is often considered one of the most tax-efficient ways to close a company, but if companies wait too long, they may be subject to higher taxes when using this method.
Adjustments to Capital Gains Tax lead to a similar impact for those who are considering an MVL process.
The government’s crackdown on anti-avoidance measures will likely increase scrutiny of the liquidation process, potentially leading to further delays. This highlights the importance of ensuring you fulfil all legal obligations and do not commit any wrongdoing within your company. A licensed insolvency practitioner will be duty-bound to report any failures to comply, and directors may face penalties. Read more about hospitality business liquidation.
Additional changes introduced by the 2025 budget
- Living Wage increases
Business-rate changes will affect businesses differently. Some larger commercial companies may face higher costs, while many smaller retail, hospitality and leisure companies will benefit from permanently lower multipliers from 2026.
How does the 2025 budget affect liquidation?
Because Business Asset Disposal Relief (BADR) increases to 18% from April 2026, some business owners may choose to liquidate before this date to take advantage of the lower 14% rate. After April 2026, distributions through an MVL may be taxed more heavily, but the MVL process can still remain highly tax-efficient – the benefit simply reduces.
The right timing for an MVL depends on several factors, including the size of your gains, whether you qualify for BADR, your long-term plans for the company, and your overall financial position.
Budget changes & company closure: What to do
It’s always recommended to seek personalised advice on the autumn budget and liquidation. Every business is different and therefore should be offered tailored advice.
Tax rules can change. Always seek personalised professional advice before making closure decisions. Read more about Making Tax Digital 2026 for sole traders.
At 1st Business Rescue, we support businesses across multiple sectors with all aspects of liquidation. We provide expert advice on MVLs and would be more than happy to help. Contact us today for a no-obligation consultation. You can rely on us for professional and trusted advice.
Justin Barker
I’m Justin Barker, the Managing Director at 1st Business Rescue. I have over 25 years of experience providing insolvency advice to business owners.
I understand how challenging it can be when dealing with financial difficulties within your business. It’s easy to ignore the problem and hope that it disappears, but this is often the worst thing you can do. Our dedicated team is here to provide honest, valuable advice to help UK directors deal with their personal situations in the most appropriate way.
No case or circumstance is the same, but I can guarantee that I am there to give you the best advice.
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