Commenting on the Insolvency Service’s monthly insolvency statistics for England and Wales, R3, the UK’s trade body for restructuring, turnaround and insolvency professionals, said the figures highlight the continued financial strain facing businesses and households as 2026 begins.
Tom Russell, R3 President commented:
“January is often a tough month financially for businesses and households alike, and today’s insolvency figures reflect the dismal, rain-soaked start to the year the UK has endured, with corporate insolvencies in England and Wales 4% higher at 1,744 in January 2026 when compared to December 2025 (1,683).
However, there is a ray of sunshine with corporate insolvencies 14% lower than the same month in the previous year (2,028 in January 2025).
“Businesses across several sectors haven’t had the results from the ‘Golden Quarter’ boost they had hoped for. As a result, January has slightly become a tipping point, where high costs, disappointing sales and year-end financial pressures converge.
“Although the latest GDP figures show 0.1% growth for December and 1.3% growth for 2025, forecasts point to continued slow growth and subdued business confidence this year. Construction, meanwhile, recorded its worst performance in more than four years reinforcing the findings of R3’s Annual Business Health report which identified it as the most distressed sector in 2025.
“Small and medium size (SME) businesses are particularly exposed to cashflow pressures and late payments, with construction firms especially affected. A recent report by the Business and Trade Committee found SMEs are owed tens of billions of pounds in unpaid invoices, with nearly half of all invoices paid late. It also noted that late payments are responsible for the closure of 38 UK businesses every day, a trend reflected in today’s figures.”
Turning to personal insolvencies, Tom Russell, who is also a licensed insolvency practitioner and director at James Cowper Kreston, added:
In January 2026, 10,843 individual insolvencies were recorded in England and Wales. This represented a 12% increase compared with January 2025, but a 20% decrease in December 2025, when figures were affected by a temporary backlog of IVAs agreed in November but not registered until December.
Individual insolvencies in January 2026 consisted of 780 bankruptcies, 3,847 were debt relief orders (DROs) and 6,216 were individual voluntary arrangements (IVAs). DRO volumes fell from December 2025 but remained close to the historically high levels recorded over the past two years. IVA numbers were slightly above the 2025 monthly average. Bankruptcies increased month on month, although figures were influenced by the partial clearance of a backlog following the Insolvency Service’s move to a new case management system.
“Personal insolvency levels remain somewhat elevated, and we expect this trend to continue while food, energy and other essential costs remain high. Many people in financial difficulty are turning to Debt Relief Orders (DROs) and Individual Voluntary Arrangements (IVAs) as a way of managing unsustainable debts.
“With cost-of-living pressures continuing to bite, some households are increasingly relying on short-term buy now, pay later, borrowing to cover everyday essentials. It is therefore welcome that, from July, the sector will be brought under Financial Conduct Authority regulation, which should strengthen consumer protection.
“Unfortunately, our members’ experience shows that many businesses and individuals delay seeking professional advice, often due to embarrassment or a hope that the situation will improve. However, getting advice from an R3 member at an early stage significantly increases the options available and the likelihood of stabilising finances before problems become unmanageable.”
What the latest insolvency stats show:
- Corporate insolvencies increased by 4% in January 2026 compared to December 2025 rising to 1,744 from 1,683. January’s figure was 14% down on the same month in 2025.
- Personal insolvencies increased by 12% in January 2026 compared to January 2025, rising to 10,843 from 9,644. Personal insolvencies were 20% lower in December 2025 compared to January 2026, when numbers were affected by a temporary backlog.
