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.
Related terms
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Voluntary strike-off
Voluntary strike-off is the way directors close a limited company they no longer need, by applying to Companies House on form DS01 (£13 online)…
Read definition -
Bona vacantia
Bona vacantia means "vacant goods", the legal term for ownerless property that passes to the Crown.
Read definition
