Members' Voluntary Liquidation and Business Asset Disposal Relief

Use it when the company is solvent, has ceased or is ceasing to trade, and holds reserves well above the £25,000 capital treatment limit that applies on a simple strike-off.

Below that figure, a strike-off with a capital distribution is usually cheaper. Above it, the tax saved normally exceeds the liquidator's fee several times over.

The directors swear a declaration of solvency stating that all debts can be paid within 12 months. Shareholders pass a resolution to wind up and appoint a licensed insolvency practitioner as liquidator.

The liquidator realises the assets, settles liabilities and distributes the balance to shareholders as capital, then obtains clearance from HMRC and dissolves the company. Typical timescales run a few months, with an initial distribution often made early.

BADR charges qualifying gains at 18% up to a £1m lifetime limit. You generally need to have held at least 5% of the ordinary share capital and voting rights, and to have been an officer or employee, for at least two years before the disposal.

The relief is per person, so two qualifying shareholders each have their own lifetime limit. Structuring the shareholding years in advance matters far more than anything done in the final month.

A targeted anti-avoidance rule recharacterises a winding-up distribution as income where, within two years, you carry on a similar trade or activity and one of the main purposes was to obtain a tax advantage.

Closing a company and restarting the same business is exactly what it catches. If you intend to keep trading in the same field, take advice before starting an MVL.

Rates, thresholds and deadlines quoted here reflect the 2026/27 UK tax year. Check current GOV.UK guidance, or ask us, before relying on them for your own company.