What is Members’ Voluntary Liquidation (MVL)?

Members’ Voluntary Liquidation (MVL) is a process for closing a solvent company that is no longer needed. It is often used when directors and shareholders wish to retire, restructure, or extract profits in a tax-efficient manner. To proceed with an MVL, the company must be able to pay all its debts within 12 months. Directors must make a statutory declaration of solvency confirming this. A licensed insolvency practitioner is appointed as liquidator to oversee the process, realise assets, and distribute surplus funds to shareholders. MVLs are particularly attractive to owner-managed businesses because they allow retained earnings to be distributed as capital rather than income, which may qualify for Business Asset Disposal Relief (formerly Entrepreneurs’ Relief). This can significantly reduce the tax payable on distributions. Unlike CVL or compulsory liquidation, MVL is a positive step taken by directors to close a company in good financial health.