The Insolvency Service has published its Annual Report and Accounts for 2025 to 2026, its final report under the current five year strategy before a new strategy launches later this year. Alongside £42.7 million returned to creditors and the wider economy, the report points to a marked step up in enforcement activity, with director conduct and abusive phoenix companies coming under closer scrutiny than before.
Duncan Beach, Chief Executive of The Insolvency Service said “Our purpose is clear: to support people and businesses in financial difficulty, protect creditors and taxpayers, and uphold confidence in the UK’s insolvency and corporate systems.”
Enforcement action is intensifying
The agency disqualified 1,153 directors for misconduct, an 11 per cent increase, and had 185 live company investigations open at year end, up 39 per cent. This followed the publication of its first public facing Investigation and Enforcement Strategy in July 2025, a five year plan for more proactive, intelligence led enforcement.
Abusive phoenixism, where directors repeatedly dissolve and restart companies to dodge creditors, was singled out for attention. The agency completed 148 civil investigations into suspected phoenixism, resulting in 18 companies being shut down and 87 directors disqualified, and the 2025 Autumn Budget backed this with £25 million over five years for a dedicated taskforce of 50 additional staff.
Much of this enforcement is now powered by closer working with Companies House under the Economic Crime and Corporate Transparency Act 2023, with intelligence reports shared between the two agencies up by a fifth on the previous year, helping suspicious filing patterns and repeated company failures get picked up sooner.
Supporting businesses through financial difficulty
The report also sets out the scale of support the agency provided over the year:
- 11,515 new insolvency cases handled by Official Receivers
- 70,633 redundancy payments processed for employees affected by employer insolvency
- 48,850 Debt Relief Orders approved, up 5 per cent on the previous year
- 80,542 Breathing Space protections granted, including 1,363 for people in mental health crisis
Debt Relief Order numbers rose following the removal of the £90 application fee in April 2024, a change intended to stop cost being a barrier to debt relief for the most financially vulnerable. The agency also identified around £500,000 in fees paid before the change by people who never completed their application, and has since refunded around £80,000 of this to eligible customers.
What this means for your business
Investigations, disqualifications and phoenixism enforcement are all rising, backed by new funding and closer data sharing between the Insolvency Service and Companies House.
For directors of companies in or approaching financial difficulty, that makes good governance and early advice more important than ever.
- Keep clear records of decisions made during periods of financial strain, including any advice taken and options considered
- Take advice early rather than waiting until insolvency is unavoidable, which puts you in a stronger position with creditors and regulators alike
- Be alert to phoenixism risk if restructuring or starting a new venture after a company failure, given the extra funding and scrutiny now going into this area
