MVLs and BADR: Planning ahead for upcoming tax changes

A Members’ Voluntary Liquidation (MVL) is a well‑established and tax‑efficient way to wind up a solvent company. Distributions made to shareholders during an MVL are treated as capital, and subject to meeting the qualifying criteria, may benefit from Business Asset Disposal Relief (BADR).

The current BADR rate is 14%, but this will increase to 18% from 6 April 2026. Shareholders who wish to take advantage of the lower rate will need to ensure their company has entered MVL, and that funds are distributed, before this date.

Supporting group simplification

Alongside single‑entity MVLs, we regularly support clients with the solvent restructuring of larger group structures. This process, often referred to as corporate simplification, involves closing dormant or non‑core entities, resolving intercompany balances and streamlining reporting lines.

The benefits of MVLs and corporate simplification

Implementing an MVL or simplifying a group structure can deliver a range of advantages:

• Cost savings: Even dormant companies can cost upwards of £4,000 per year once audit fees, filing obligations and administrative time are considered. Removing unnecessary entities delivers immediate and recurring savings.
• Reduced risk: A simplified structure improves governance, reduces directors’ personal exposure and provides clarity for auditors, lenders and regulators.
• Enhanced value: A clean group structure supports refinancing, exit or sale processes by reducing due diligence complexity and helping protect value.
• Operational efficiency: Fewer entities mean less administrative burden, freeing management and finance teams to focus on running and growing the business.

The importance of early planning

The most valuable stage of any MVL or corporate simplification project is the pre‑appointment planning. Early engagement allows us to identify the most efficient route, reduce complexity and minimise costs, particularly important ahead of the upcoming BADR rate change.