Businesses are facing growing financial strain, with new data showing a clear rise in both tax payment difficulties and company insolvencies.
Recent research indicates that 95% of accountants and financial advisers have seen an increase in clients struggling to meet their tax obligations. Of those surveyed, 59% reported that the number of affected clients has risen by between 10% and 14%, according to Premium Credit.
Corporation tax is now emerging as the primary pressure point. Half of those surveyed identified it as the area where clients are experiencing the greatest difficulty, while 26% highlighted VAT and 24% pointed to income tax. This marks a notable shift from last year, when 70% of respondents cited income tax as the main concern.
Jennie Hill, COO of specialist finance at Premium Credit said:
‘Accountants and financial advisers are facing a growing issue with clients struggling to pay tax bills, which is likely to have a knock-on effect on the financial strength of these businesses and ultimately whether they can survive.’
This increasing pressure is reflected in the latest insolvency figures. Company insolvencies reached an eight-month high in March 2026, with 2,022 cases recorded, representing a 7% increase compared to the previous month. The last time insolvencies were at a similar level was in July 2025, when 2,058 cases were reported.
Figures from the Insolvency Service show that March included 1,468 creditors’ voluntary liquidations, 299 compulsory liquidations, 235 administrations and 20 company voluntary arrangements (CVAs).
While creditors’ voluntary liquidations fell slightly by 1% month-on-month, other categories rose sharply. Administrations increased by 52%, compulsory liquidations rose by 18%, and CVAs doubled, albeit from a low base, increasing by 10 cases.
Giuseppe Parla, restructuring & insolvency director at Menzies said:
‘The new tax year has brought a fresh wave of cost pressures.
‘While there have been no headline rate rises, frozen thresholds, reduced reliefs and tighter allowances are quietly intensifying “fiscal drag” – steadily increasing the tax burden on both businesses and consumers.’
These developments come despite stronger economic output, with GDP growth of 0.5% recorded in February.
Tom Russell, R3 president said:
‘Just as business and consumer confidence was starting to improve, the economic fallout from the Middle East conflict, in particular higher fuel and energy prices, are putting a financial squeeze on UK businesses and households alike.
‘While it may be too early to see the full impact of the worsening economic situation in the formal insolvency statistics, energy and fuel costs have risen significantly, and for many businesses this has come at the same time as customers are becoming more cautious with their spending. That combination is extremely challenging, particularly for businesses with limited financial headroom.’
The underlying causes of these pressures appear to be mixed. According to the research, economic factors such as tax increases, wage inflation, rising supply costs and broader cost of living pressures are having an equal impact alongside personal circumstances, including divorce and redundancy.
Premium Credit stated:
‘Economic factors including tax rises, wage inflation, supply costs and general cost of living pressures were ranked as having the same influence as personal issues such as divorce and redundancy.’
There is also growing reliance on HMRC’s Time to Pay (TTP) arrangements. Currently, 62% of accountants and financial advisers report that at least 5% of their clients are using TTP, compared with just 25% reporting similar levels of usage in last year’s study.
