INSOLVENCY-RELATED activity in Scotland hit a 29-month high in May 2025, according to new research from R3, the UK’s insolvency and restructuring trade body.
R3’s analysis of data provided by Creditsafe shows there were 141 cases of insolvency-related activity in Scotland in May – the highest number on record since December 2022’s figure of 142.
Insolvency-related activity, which includes administrator and liquidator appointments along with creditors’ meetings, rose by 30.6% in May when compared to the previous month’s total of 108, and by 18.5% compared to May 2024’s total of 119.
Compared to the rest of the UK, Scotland saw both the largest monthly and yearly percentage increase in insolvency-related activity numbers.
Tim Cooper, immediate past president of R3 and partner at international law firm Addleshaw Goddard, says: “We have seen a substantial rise in insolvency-related activity in Scotland since the start of the year, but last month’s rise to the highest point in more than two years is a reminder of just how tough trading conditions are.
“Levels are now higher than they were for much of 2023 and for 2024, when many businesses were grappling with the aftermath of Covid and the impact of the cost-of-living crisis.
“A number of factors are likely contributing to the increase we’re seeing, including a rise in MVLs from directors choosing to close their businesses in response to recent tax and policy changes, such as the increases to Employers’ National Insurance and the minimum wage.
“We are also seeing a rise in winding up petitions as creditors take the lead from HMRC, which has become increasingly more willing to chase the debts it is owed.
“HMRC’s more assertive stance seems to be influencing other creditors to follow suit, particularly where there are signs of persistent non-payment.
“This increase in insolvency-related activity also reflects the wider economic picture in Scotland.
“Business activity remains subdued, and firms continue to face persistent cost pressures, higher tax obligations, and weak demand.
“For some, the combination of these pressures is tipping already fragile businesses into formal insolvency processes.
“For business owners facing financial difficulties, the most important step is to seek advice early.
“No one should feel they have to navigate money worries alone, and by speaking to a qualified professional at the first signs of distress, you will have more time and more options for resolving your concerns than if you waited for the issues to spiral.”
