Glossary

Members’ voluntary liquidation (MVL)

Krishna Prasad Dahal, Chartered Accountant

Reviewed by Krishna Prasad Dahal FCCA, ACA (ICAEW), FCA (ICAI India)ICAEW Council Member · Last reviewed

Definition

A members’ voluntary liquidation (MVL) is a formal process for closing a solvent limited company, run by a licensed insolvency practitioner acting as liquidator. Directors usually consider it when more than £25,000 of reserves remain, because distributions to shareholders in an MVL are normally taxed as capital gains rather than as income, and may qualify for Business Asset Disposal Relief.

Who can use an MVL

The company must be solvent, meaning its assets are worth more than its debts, and able to pay its debts within 12 months. The directors confirm this in a Declaration of Solvency.

MVL vs voluntary strike-off

Voluntary strike-off MVL
Run by The directors A licensed insolvency practitioner
Main cost £13 online filing fee Insolvency practitioner’s fees
Final distributions Capital only up to £25,000 in total Normally capital, with no £25,000 limit

Tax points

  • Business Asset Disposal Relief taxes qualifying gains at 18% from 6 April 2026, if conditions are met, such as holding at least 5% of the shares and voting rights for 2 years.
  • If a shareholder goes on to carry on the same or a similar activity, an HMRC anti-avoidance rule can tax the distribution as income instead.

Before closing, compare the ways to take money out of a limited company while it is still trading, such as a final dividend.

Related questions

  • How do I close a limited company? A solvent company can use voluntary strike-off, usually the cheapest route, or an MVL.
  • Is an MVL worth it for small reserves? Often not, because strike-off distributions up to £25,000 are already treated as capital.

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