Answers · UK 2025/26
What is a Members' Voluntary Liquidation (MVL) for tax purposes?
An MVL is a formal process to close a solvent company, with distributions taxed as capital gains (potentially at 14% BADR rate) rather than income.
Full answer
A Members' Voluntary Liquidation (MVL) is used to wind up a solvent company that no longer needs to trade. A licensed insolvency practitioner is appointed as liquidator, the company's assets are collected, liabilities paid, and surplus distributed to shareholders. Crucially, these distributions are treated as capital for the shareholders (not dividends), meaning they are subject to CGT rather than income tax rates. With Business Asset Disposal Relief, the rate can be as low as 14% (2025/26) on up to £1 million of qualifying gains. HMRC's TAAR (Targeted Anti-Avoidance Rule) can recharacterise distributions as income if the company was wound up to avoid income tax and the shareholder continues similar activities within 2 years.
This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.