Business insolvencies in 2025 hit record levels with 24,000 businesses affected

The number of corporate insolvencies rose by 0.2% in 2025 compared to 2024, climbing to 23,938 businesses, despite a 10% fall in insolvencies in December. Personal insolvencies increased by 7% in 2025 compared to 2024, rising to 126,240 from 117,958.

Jodie Wildridge, deputy chair of the UK’s insolvency and restructuring trade body R3 in Yorkshire and a barrister at Kings Chambers in Leeds, said: “Businesses and households in Yorkshire and across the UK remain under financial strain, with difficult trading conditions, high overheads and the impact of the national insurance rise weighing heavily on businesses last year.”

Compulsory liquidation levels have increased to their highest annual number in 13 years as creditors take firmer action to recover debts to manage pressures in their own businesses. Creditors’ voluntary liquidation numbers over the past four years are at their highest levels since records began in 1960.

“Although inflation has begun to ease and economic growth has picked up slightly, 2025 was a year in which many businesses were on fragile ground financially. The lasting effects of elevated costs, restricted access to finance and subdued customer demand continue to stretch cashflow, particularly for smaller and mid-sized firms,” said Ms Wildridge.

Construction continued to be the most distressed sector last year with 3,950 companies entering insolvency, which accounted for 17% of industries captured. Major housebuilders are also forecasting static growth and muted demand this year due to market uncertainty and rising building costs. Retail and hospitality also remained the second and third most distressed sectors.

“With pressures remaining high for both businesses and individuals alike, seeking professional advice from R3 members gives people and companies more options, more time and a far greater chance of stabilising finances before problems become unmanageable,” added Ms Wildridge.