Liquidation Cost Calculator

An MVL (Members Voluntary Liquidation) is for solvent companies — the directors make a statutory declaration that the company can pay all its debts within 12 months. Funds are distributed to shareholders as capital (taxed at CGT rates, potentially 10% with Business Asset Disposal Relief). A CVL (Creditors Voluntary Liquidation) is for insolvent companies — debts exceed assets and creditors receive a dividend from whatever can be realised.

A simple MVL typically costs £2,500-£3,500 plus VAT for a company with straightforward assets (cash, investments) and no property. If property needs to be sold or there are complex tax issues, costs rise to £4,000-£7,000+. The key benefit is tax efficiency: extracting retained profits as capital distributions taxed at 10% CGT (with BADR) rather than income tax/NI at up to 45%.

An MVL is advisable when the company has more than £25,000 to distribute, as distributions above this threshold via strike off are taxed as income (up to 45%). Below £25,000, a simple strike off (£10 fee) is usually more cost-effective. An MVL provides a formal legal closure, protects directors from future claims, and ensures tax-efficient capital treatment.

An MVL typically takes 6-12 months if assets are straightforward cash. A CVL takes 12-24 months or longer depending on asset realisation and investigations. Both require a minimum 3-month notice period to creditors/shareholders. Complex cases involving property sales, litigation, or director misconduct investigations can extend to 3-5 years.

Business Asset Disposal Relief (formerly Entrepreneurs' Relief) allows company shareholders to pay just 10% capital gains tax on distributions in an MVL, up to a lifetime limit of £1 million. To qualify: you must have been a shareholder and officer/employee for at least 2 years, held at least 5% of shares and voting rights. This makes MVL significantly more tax-efficient than dividend extraction.