The Insolvency Service’s release published on 20 January 2026 provides a telling snapshot of the UK’s corporate distress landscape as we edge towards Spring. While headline numbers suggest a degree of stability, the detail points to a persistently pressured environment – particularly for consumer‑facing sectors.
Across England and Wales, around 1 in every 190 registered companies entered insolvency during 2025, equating to 52.5 insolvencies per 10,000 companies. This rate is broadly unchanged from 2024. However, stability should not be mistaken for recovery. Instead, the annual data reinforces that insolvency levels remain elevated compared with pre‑pandemic norms.
A closer look at the statistics illustrates shifting dynamics beneath the surface. A slight reduction in creditors’ voluntary liquidations (CVLs) was offset by a corresponding increase in compulsory liquidations, reaching their highest annual level since 2012. This points to hardening creditor behaviour and a greater willingness – particularly from HMRC – to pursue enforcement action where arrears persist.
Monthly volatility continues. The total number of corporate insolvencies recorded in December 2025 was 1,671 – 10% lower than November 2025 and 13% lower than December 2024. But this seems to be an outlier in the 2025 figures, possibly reflecting a seasonal slowdown. Taken in the round, the annual figures tell a clearer story: distress levels remain stubbornly high, and many businesses appear to be operating with little margin for further shocks.
The rate of entry into an insolvency process varies by industry sector. In the 12 months to November 2025 (for insolvencies where industry codes were captured), around a third of insolvencies related to the hospitality and retail sectors (with wholesale and retail accounting for 16%, and accommodation and food services a further 14%).
This concentration is unsurprising. Both sectors continue to face acute margin pressure driven by rising costs and constrained consumer demand. UKHospitality has estimated that from April 2025, the sector will absorb £3.4bn in additional annual costs, comprising £1.9bn in wage increases, £1bn in higher employer NICs, and £500m in increased business rates. For many operators, these increases have outpaced their ability to reprice, restructure or refinance.
As we move into 2026, these persistently high levels of distress underline the need for proactive restructuring planning and early engagement with lenders and other stakeholders. Securing professional advice at an early stage is key to preserve options and puts businesses in the best position to achieve a positive outcome. For a broader assessment of what this might mean for businesses, lenders and advisers in the year ahead, see our latest article: Restructuring and insolvency: outlook for 2026 in which we explore key trends shaping the market, from creditor behaviour to sector‑specific risk.