Corporate insolvencies in Scotland rise for second year in a row

24th April 2025

There were 1,175 corporate insolvencies in the year 2024-2025. This was a slight increase of 0.6% from 2023-2024's figure of 1,168, and an increase of 3.8% on 2022-2023’s figure of 1,132.

There were 7,412 personal insolvencies in the year 2024-2025. This was a decrease of 8.3% from 2023-2024’s figure of 8,082, and a decrease of 7.4% on 2022-2023’s figure of 8,001.

Commenting on the annual Scottish Insolvency Statistics 2024-25, Tim Cooper, President of insolvency and restructuring trade body R3 and Partner at Addleshaw Goddard LLP, said, "The increase in corporate insolvencies is due to a rise in compulsory liquidations. While figures for this process are not yet at pre-pandemic levels, they have increased since last year and significantly increased since the 2022-23 financial year. We have seen an increase in creditors’ willingness to actively pursue debts, with HMRC the largest and most common applicant to issue a winding-up order in an attempt to recover money for public purse, and private sector creditors following them in an effort to balance their own books.

"Members’ Voluntary Liquidation levels have also increased compared to last year - with a big increase in numbers in between Q2 and Q3 of this year. It may be that the prospect of having to navigate the rises in National Insurance and Minimum Wage, which came in at the start of this month, was too much for some directors and led to them closing their firms while they were still solvent and while the choice to do so was theirs.

“For many Scottish businesses, 2024 was less about growth and more about staying afloat. Economic growth remained sluggish and much of the momentum from earlier in the year gave way to flat conditions by the end of the Q4. Firms across a range of sectors have faced rising costs, weaker demand, and growing uncertainty about the broader economic outlook, all of which have made it increasingly difficult to plan and operate with confidence.

“Rises in Employers’ National Insurance and the National Minimum Wage in the Autumn Budget caught many businesses off guard. These increases will particularly affect businesses with a high proportion of lower-paid or part-time roles, including those in retail, hospitality, and social care. As the changes take effect, the pressure on margins is being felt across the board, and business owners are facing difficult decisions about how to manage through an already tough environment.

“Looking ahead, it is clear that 2025 won’t be without its challenges. Cost pressures remain a real concern, and with growth expected to stay subdued, many firms will be working hard just to maintain stability. There is also uncertainty around global trade, particularly with new US tariffs on the horizon, which could affect some of our key exporters. While a degree of stability is welcome, conditions remain difficult, and many businesses will be focused on adapting to what could be another uncertain year.

“Turning to the personal insolvency numbers, the yearly decrease has been driven by a fall in Protected Trust Deeds, which have fallen to the lowest level since 2015-16. This is likely due to the impact of changes to the process which took effect in July, introducing tighter eligibility criteria and increased scrutiny around the process.

“At the same time, the number of bankruptcies has remained broadly consistent, and has been higher over the past two years than during 2022–2023. That may reflect a rise in the levels of debt individuals are carrying, compared with during the pandemic period.

“2024 was another difficult year for households across Scotland. The high and increasing costs of food, energy, and other bills continued to put a strain on personal finances, leading some to rely on food banks or dipping into savings just to cover basic expenses. Consumer confidence also took a hit, with people feeling increasingly worried about their financial future and cutting back on non-essential spending as a result.

“The cost of housing also remains a major concern. The end of the rent cap in March is expected to add further financial strain, particularly in urban areas where rents have already risen steeply. At the same time, high mortgage rates continue to affect homeowners. While recent interest rate cuts may provide some relief for new borrowers, those with existing loans remain under significant pressure.

“For anyone worried about their financial situation, whether personally or in business, my advice is to seek help from a qualified professional at the earliest opportunity. It is not an easy step to take, but acting early means having more time to explore the right options and a better chance of resolving your concerns before they worsen."