Members' Voluntary Liquidation (MVL)
A Members' Voluntary Liquidation, or MVL, is the formal way to close a solvent company, one that can pay all its debts, where there is retained profit to distribute to shareholders. It must be carried out by a Licensed Insolvency Practitioner, and the directors must swear a declaration of solvency confirming the company can pay its debts within twelve months. Insolvency Service; gov.uk
- For
- Solvent companies with retained profit to distribute
- Tax
- Reserves usually treated as capital; possible Business Asset Disposal Relief
- Requires
- A Licensed Insolvency Practitioner and a declaration of solvency
- If insolvent
- An MVL is not available; use a CVL instead
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At a glance
| Route | For | Why |
|---|---|---|
| MVL | A solvent company with significant retained profit | Distributions usually treated as capital; possible Business Asset Disposal Relief |
| Strike off (DS01) | A solvent company with little or no retained profit | The cheapest close once its affairs are settled |
| CVL | A company that cannot pay its debts | The correct route when an MVL is not available |
Why companies use an MVL
An MVL is different from the other liquidation routes because it is used by healthy companies, not insolvent ones, typically when a director is retiring, the business has served its purpose, or a contractor is moving to permanent employment. The attraction is tax efficiency: distributing the company's reserves through an MVL means the funds are usually treated as capital rather than income, which can mean a lower tax rate and access to Business Asset Disposal Relief for those who qualify.
Solvent only
The dividing line is solvency. If the company can pay all its debts within twelve months and has reserves to distribute, an MVL is often the most tax-efficient close. If it cannot, an MVL is not available and the correct route is a Creditors' Voluntary Liquidation. Check with the insolvency tests if you are unsure.
Related data
Our UK company insolvency tracker: The latest insolvency figures, for context on the insolvent routes an MVL is not. Every page on our data hub names its official source.
Common questions
Is an MVL worth it?
For a solvent company with significant retained profit, an MVL is often more tax-efficient than a strike off, because distributions are usually taxed as capital. The savings need to outweigh the practitioner cost, so it suits larger reserves.
Can a members' voluntary liquidation be reversed?
An MVL is generally not reversed, because it is used to close a solvent company and distribute its reserves. If, after it begins, the company turns out to be unable to pay its debts within the twelve months declared, the liquidator must convert it into a Creditors' Voluntary Liquidation instead.
How much does a members' voluntary liquidation cost?
An MVL must be handled by a Licensed Insolvency Practitioner, so it costs more than a simple strike off. The practitioner sets the fee based on the work involved. It suits companies with enough retained profit for the tax saving to outweigh that cost; a practitioner will quote before you commit.
MVL or strike off, which should I use?
For a solvent company with little or no retained profit, a strike off via DS01 is the cheapest close. For a solvent company holding significant reserves, an MVL is usually more tax-efficient because distributions are treated as capital. The size of the reserves is what tips the decision.