What Does It Cost To Liquidate a Company?

If you are searching on the internet how to liquidate a company, one of the top questions on your mind is, how much does it cost to liquidate a business in the UK? Chances are, you haven’t found many specific answers and the websites have to offer you a free consultation before they tell you the cost to liquidate your business.

It’s probably the question that I get asked the most and normally I get asked the question towards the end of a conversation after I have explained everything about liquidating your company to a client. I completely understand why it is such an important question to ask and I’m going to do my very best to answer it in as much detail as I can in this blog post.

Let’s be honest with each other, if you are looking to liquidate your business it’s probably because your business is struggling financially, your running out of money and you have been stressing and worrying about your company for some time, you haven’t just woken up today and thought ‘I’m going to liquidate my business’. This issue has probably kept you awake at night and may have affected both your mental and physical health. I know this because I have been through what you’re going through right now when I had to liquidate my company. I did not know where to turn and every website I visited left me asking more questions, I was confused and the more insolvency practitioners that I talked to, the more confused I become. There was so much conflicting advice out there, I felt lost and I did not know where to turn.

I need to get this out up front, the cost to liquidate your business, does depend and it’s definitely not a once size fits all approach, there are many variables. There are also different ways that you can fund the liquidation of your business. At the risk of sounding like all the other insolvency companies out there, it would always help to have a chat with you so we can find out exactly what your challenges may be. This would allow one of our experienced team to put together a full proposal outlining all costs for you to review.

I hope this blog is going to educate you about the cost to liquidate a company and what fees you could be expected to pay. You may read this post and decide to use someone else to liquidate your company, I hope that even if you do that, this blog will have helped you make a better-informed decision for you and your business.


Most small liquidations should cost the director from £4,000 – £6,000 + VAT, these prices are correct as of October 2021. This price will be to liquidate a small company with only a handful of creditors, normally HMRC and the Bounce Back Loan. The more work involved in liquidating a company the higher price that you could be charged. For instance the more suppliers, creditors, and employees a company has, the more money it will cost to liquidate as there will be more work for the insolvency practitioner to carry out.

Be extra careful if you are being quoted less to liquidate a company, there is a good chance you are not being told everything up front and there will be extra charges and costs billed after you go into liquidation. The liquidation fee is just the headline figure. Once you have appointed an insolvency practitioner you have very little room to negotiate. You need to get everything of them in writing before you make a decision on liquidating your company.


When you pay an insolvency practitioner to close your ltd company, your liquidation fees will cover the following tasks:

  • All the relevant information about your company will be collected
  • Your liquidation papers will be produced and sent to you
  • A creditors meeting is set
  • All your creditors are informed of the pending liquidation
  • Staff will be made redundant
  • The insolvency practitioner will deal with all creditors and handle any enquiries
  • An investigation into the conduct of the director will be carried out
  • Bank statements will be analyzed
  • Money will be distributed to creditors of the company
  • Director conduct reports prepared and issued
  • Creditors reports prepared and issued


There are a number of ways that you can fund the cost to liquidate your company.

Company Funds

If the business has any money left you could be able to use these funds to pay for the insolvency practitioner’s fees.

Company Assets

One of the responsibilities of an insolvency practitioner is to sell company assets and collect money that is due in to the company. In certain circumstances, the cost of liquidation can be paid from the sale of assets or the collection of money due in. Sometimes the sale of the assets might not raise enough money to cover the cost to liquidate so you may need to cover the difference.

Personal Funds

If there is no cash left and no assets to sell a director may cover the cost of liquidation personally to avoid being forced into liquidation by one of the company creditors.

Director Redundancy

If you are a director who has been registered on the companies payroll for over 2 years and have worked a minimum of 16 hours a week then you could be entitled to a director redundancy claim. The average claim in the UK is £9,000 so more than enough to cover the cost of liquidation. The claim value is dependant on age, years of service, and pay. For example, if you are 38 years old and have only been on the payroll for 2 years your claim is going to be around £4,000 which is still a good chunk towards your cost of liquidation.

Things that you must be aware of before you decide to liquidate your business:

Any overdrawn Directors Loans and how you will repay them.

Don’t just go off your last set of published accounts to find this out as they could be 18 months out of date. It’s always best to have an up-to-date final set of accounts done before you liquidate your company. This will display if you have an overdrawn director’s loan account. Don’t be tempted to bury your head in the sand on this matter thinking the insolvency practitioner won’t check. They will and it could cost you a lot more money if they uncover that you have an overdrawn directors loan once you have appointed them. If you can’t get a final set of accounts done insist that the insolvency practitioner does a transactional analysis on your business bank statements from the date of your last set of published accounts to today’s date. Using this method, although time-consuming will allow the insolvency practitioner to work out a ‘worse case scenario’ on an overdrawn directors loan and you can agree on either a repayment plan or civil settlement on that figure. The insolvency practitioner will need to assess your affordability in paying the overdrawn directors’ loan back and will want to know if you have any assets or investments in your personal name. If you can afford to and you have equity in your family home or rental properties then you will be expected to make more repayment back than someone who is renting and on universal credit. Each situation is judged on a case-by-case basis so if you’re worried about an overdrawn director’s loan call me today so I can guide you through the options. Whatever you do, don’t agree to liquidate your company until you have uncovered this information and discussed it with the insolvency practitioner.

Preference Payments

Insolvency Practitioners can and will pursue a director personally for any preference payments that have been made by the director in the lead-up to the company going into liquidation. To keep it simple, you could be accused of making a preference payment by an insolvency practitioner if you have paid one creditor above another creditor who is also owed money by your company. Some examples of this are when a director decided to pay off a supplier whom they have signed a personal guarantee with instead of another supplier who did not insist on a personal guarantee before they supplied you with goods. If you have paid off a loan to a family member or friend before paying HMRC then you have preferred them and this would be investigated by an insolvency practitioner once they become appointed. If you have made a preference payment after the company has become insolvent you could also be looking at a director disqualification as well as additional costs. My advice to you is to look through your statements before you choose to appoint the insolvency practitioner.

If you are found to have an overdrawn directors loan or have made preference payments and this is uncovered after you go into liquidation then you will be paying more money to the insolvency practitioner. There is not a week that goes by where I don’t get a call from someone who says they paid £4/5k to liquidate thinking that was the end of that and then they are landed with an additional bill a few months after. I’ve seen directors be pursued through the courts for £100,000’s of this can and does end up in the bankruptcy courts for some directors.

Next Steps

Please don’t make your decision on whom to use purely based on what the cost of liquidation is, make sure that you check your director’s loan position, check if any preference payments have been made and if you have sold any company assets, make sure that you have got the best value for them and any sales are backed up with a professional valuation.

Remember, this blog has been written to give you a rough idea of the cost to liquidate a business, the costs can vary and there are sometimes additional fees an insolvency practitioner will chase you for once you have appointed them. You can’t sweep overdrawn directors’ loan accounts or preference payments under the carpet but you can deal with them in a pro-active manner and this will likely end up in a better result than if you hope no one finds them.

My advice is clear, if you are looking to close your company down you should take advice and the earlier you do them more options that you have available.

At 1st Business Rescue, we will help you understand all your options and potential problems upfront with no hidden surprises.

I hope this blog has helped you understand in more detail the costs of liquidation, what you get for the costs, and things to check out before you make the decision to liquidate your company.

We are more than happy to give you an actual quote for liquidation. If you would like to understand your options, potential problems, and what it would cost to liquidate your company then get in touch with us for some no strings and no-obligation advice.

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