Contact David Kirk by email direct by clicking on his name

01392 474303

Are Insolvency Payments Taxable?

The quick answer

The usual answer is yes, but I am assuming that ‘payment’ means a payment out to you and therefore you are receiving the money. There are two types of payment paid out of a liquidation. The first type is to shareholders for share capital plus profits and the second is repayment of a debt.

In more detail

In a Members’ Voluntary Liquidation the repayment of share capital above face value is a taxable gain and should be declared on your tax return. The capital gains tax rate you will pay is usually 10% on the first £1 million and 20% thereafter. If you want to find out more about that tax due, and what you will pay you need to look at the rules under Business Asset Disposal Relief.

If you are owed money in a liquidation (and you are usually known as a creditor) then you may get back nothing, something or all of your debt. If this was a trade debt for goods or services, then what you receive should be included in your annual accounts. If you did not get repaid in full the balance can be written off as a ‘bad debt’. Your accountant will know how to treat this.


In a Members’ Voluntary Liquidation make sure you declare any capital gain on your tax return.

More questions in this section

David Kirk


David Kirk ACA FABRP

We have just worked with Kirks to complete the closure of our company. Everything went smoothly and professionally. I would recommend this firm and the staff who were very very helpful and quickly finalised everything. Thank you Kirks.
Carol Hill



Sign up to our newsletter

Request a callback

Simply fill out the short form below and I will get back to you.

David Kirk Portrait

David Kirk

Licensed Insolvency Practitioner