Increasing costs and uncertainty are continuing to drive corporate insolvencies, the Wales Chair of insolvency and restructuring trade body R3 has said.
Corporate insolvencies in England and Wales increased by 2.9% in April 2025 to a total of 2,053 compared to March 2025's total of 1,996, and decreased by 5.1% compared to April 2024's total of 2,163. Corporate insolvencies increased by 13.2% from April 2023's total of 1,813.
Personal insolvencies in England and Wales increased by 7.9% in April 2025 to a total of 10,012 compared to March 2025's total of 9,282, and increased by 4.4% compared to April 2024's total of 9,586.
Personal insolvencies increased by 8.2% compared to April 2023's total of 9,252.
Bethan Evans, Wales Chair of R3, the UK’s insolvency and restructuring trade body, said:
“April’s corporate insolvency figures were the highest we have seen since July 2024.
“Creditors’ Voluntary Liquidations remain the process companies most commonly enter into and their consistently high numbers reflect the ongoing challenges, high costs and political and economic uncertainty businesses face. It demonstrates the toll these challenges are taking on business finances and confidence in their ability to turn their situation around.
“Compulsory liquidations have also hit their highest level in more than five years as creditors chase down unpaid debts in an attempt to meet their own payment deadlines. This is led by HMRC as the Government attempts to balance the national books.
“Increasing costs and uncertainty are continuing to drive corporate insolvencies. April saw the introduction of the new rates for Employers’ National Insurance Contributions and Minimum Wage, which have increased overheads for businesses at an already challenging time. Many businesses will have already increased prices and cut expenditure to try to maintain margins and cope with the existing economic challenges. SMEs in particular will find it increasingly difficult to respond to further cost increases.
“It is unlikely that we will see the full impact this will have on businesses until later in the year, but the prospect of these changes being introduced has influenced a number of directors’ decisions to seek insolvency and restructuring advice and consider the future of their businesses. The recent increase in unemployment indicates that the tax increases, along with the Employment Rights Bill coming into force, has also affected hiring levels as management teams wait to see how it will affect their wage bills, and we expect this to continue until the picture is clearer.
“Alongside this, businesses have faced the impact of the introduction of US tariffs. While some of the outcomes from the President and Prime Minister’s recent announcement will be a relief to businesses in a range of sectors, a number of tariff details still need to be confirmed. There is no denying their introduction will make it more expensive to export to America. The uncertainty and unpredictability around US trade policy generally is also likely to affect costs, growth and investment as both business owners and lenders assimilate the impact on revenue and profits.
“Looking across the economy, the sectoral picture is a mixed one. Construction continues to be sensitive to fluctuations in the price of materials, hesitancy of clients in commissioning new work and payment terms, while the care sector is trying to navigate how it will manage the Government’s proposals to end overseas recruitment for social care visas. On a more positive note, retailers have benefited from the late Easter and improved weather, which has led to an increase in sales, and hospitality has also seen a rise in activity and spending levels. However, there is no escaping the influence the changes to National Insurance and Minimum Wage could have on business finances with more becoming financially distressed.”
Bethan, who is a partner at Menzies LLP, continued:
“Turning to personal insolvencies, April’s figures were the highest we have seen for this particular month since April 2020 – although the balance between the processes has shifted significantly since then due to changes in the Debt Relief Order (DRO) debt threshold, the administration fee and in regulations around how Individual Voluntary Arrangements (IVAs) are marketed. Compared to March 2024, personal insolvencies are up significantly, with more people entering IVAs and DROs in an attempt to help manage their debts.
“When these figures are combined with those applying for Breathing Space, they suggest that the debt problem in England and Wales, which has been building over the last couple of months, is starting to be reflected in the number of personal insolvencies. This month in particular, IVA and DRO numbers have increased, and Breathing Space numbers have fallen, which could be seen as a sign that more people need practical help addressing their debts than last month.
“April also saw increases in a range of household bills, and this may have been the final straw for those who were already struggling to make ends meet after years of rising costs. For those who are not in this position, it will have led to them taking a closer look at their outgoings and making adjustments to help balance their household budgets. Wage growth has slowed despite falling inflation which remains above the 2% target, and it is very clear that people’s money does not buy what it did six or twelve months ago.
“My message to anyone in Wales who is worried about money is a simple one: seek advice as soon as possible. We know how hard it is to talk about your concerns about your finances, but having that conversation while your worries are new gives you more options to address them and more time to take a decision about your next step. Most R3 members in Wales will give prospective clients a free consultation so they can learn more about their circumstances and outline some of the potential options for addressing them.”
