Is it possible to liquidate a company for free? The straightforward answer is no; the process of company liquidation incurs professional costs for the involvement of a licensed insolvency practitioner.

On the other hand, if there are company assets that can be sold, it is possible to pay the liquidator from what is raised, meaning that the liquidation is effectively free from the perspective of directors.

Where this isn’t possible, directors may have to raise the funds themselves, as we’ll explore in detail below.

Is it Possible to Liquidate a Company for Free?

How to Liquidate a Limited Company For Free

It is not possible to liquidate a limited company for free in the traditional sense, as there will always be some costs associated with the process, such as the fees of an insolvency practitioner. Working with IP’s is required by law to ensure that creditors get the best possible return on their losses.

However, it is possible to offset these costs by selling any company assets, plus it may be possible to negotiate reduced fees with an insolvency practitioner.

Here are some specific steps you can take to liquidate a limited company at minimal cost:

  1. Assess your company’s financial position. This includes identifying all of your company’s assets and liabilities. If your company has no assets, or if the value of your assets is less than the value of your liabilities, it is unlikely that you will be able to liquidate for free.
  2. Contact an insolvency practitioner. Explain your situation and ask if they are willing to work on a reduced fee basis, or if they would be willing to consider other arrangements, such as deferred payment.
  3. Consider if you’re eligible for directors’ redundancy – While this money can’t be directly used to fund the liquidation, it may be some comfort to directors that the Redundancy Service does allow directors to claim for redundancy in liquidation, providing they are eligible. These funds can offer much-needed support during this difficult period. Directors should meet the necessary employment criteria, including continuous service and hours worked, as outlined by UK employment law.

It is always advisable to seek professional advice from an insolvency practitioner such as ourselves before making any decisions.

Closing a Company When There Is No Money for a Liquidation

When a company needs to be closed, and there are no available funds for liquidation, directors’ options narrow. Typically, liquidation costs are covered by the company’s assets. The liquidator sells these assets and uses the proceeds to pay off the liquidation expenses, including their fees and any outstanding debts to creditors.

If the company has no assets to cover these costs, the situation becomes more challenging. In such cases, the responsibility to pay for the liquidation may fall on the directors personally. This means that directors might have to fund the liquidation process out of their own pockets. If they don’t wish to do this, you have the option of waiting for a creditor to force your company into compulsory liquidation but this is generally an unfavourable alternative, with reduced control over the outcome.

Ultimately the cost of liquidation varies depending on the complexity of the company’s affairs and the liquidator’s rates. Before proceeding, directors should obtain a clear estimate of the costs involved. If personal funding is the only option, directors must assess their ability to meet these costs.

“What’s the Cheapest Way to Liquidate my Company?”

If you’re wondering what the cheapest way to liquidate is, your options are as follows:

  • Sell Assets: Using the company’s assets to cover liquidation costs. This is often the primary source of funding for the liquidation process. Selling off assets can help pay for the liquidator’s fees and any outstanding debts.
  • Wait for Compulsory Liquidation: Opting not to initiate liquidation and instead waiting for creditors to force the company into compulsory liquidation. In this case, directors wouldn’t have to find funds personally, but this approach comes with potential risks, including loss of control over the process and possible personal liabilities if wrongful trading is proven.
  • Redundancy Payments from HMRC: Directors who are also employees of the company may be entitled to redundancy payments from HMRC. Although these payments cannot be used directly to fund the liquidation, they might provide personal financial relief that indirectly supports the directors in covering the liquidation costs.
  • Directors Find the Money Personally: Directors personally funding the liquidation process. This option is considered when there are no company assets to sell and the directors wish to avoid compulsory liquidation. It requires directors to personally cover the costs of appointing a liquidator and managing the liquidation process.

“Can You Liquidate a Company for Free via Dissolution?”

While the internet is awash with advice that suggests you can liquidate a limited for free by simply dissolving it, this is misinformation, and you should do your due diligence carefully.

You cannot liquidate for free since all liquidations need to be carried out by licensed insolvency practitioners who charge for their services.

Rather, where the company has no assets of any kind, directors may have to find the funds themselves.

Don’t be tempted by internet firms which suggest you can either strike off with debts or use redundancy payments directly.

HMRC has always made it clear that dissolving a company with debt is something they do not allow, and the recent spate of bounce back loan defaults has prompted them to tighten up the law even further in this area. A new bill gives HMRC powers to investigate rogue directors who abuse the dissolution process.

Equally, insolvency practitioners’ are specifically not allowed to use redundancy payments. Be cautious about working with anyone who would suggest otherwise, and certainly don’t agree to any deal with gives a percentage of your redundancy fee to the liquidators themselves. Clearly, there is a conflict of interest for an insolvency practitioner to put in a redundancy claim, which will be used to cover their own fees.

Here at Company Debt, we advocate absolute fee transparency at all times, and we apply for directors’ redundancy on our client’s behalf at cost only.

If I Can’t Afford to Liquidate, What Will Happen?

Some directors do opt to wait until compulsory liquidation is forced by a creditor out of concern that they will not be able to find the necessary funds themselves to choose the voluntary liquidation process themselves.

Remember that all liquidators have a mandatory responsibility to investigate the actions of directors in the period preceding insolvency, so if you’re considering this course of action, you should be very clear on your legal responsibilities. Paying any creditor in priority over another or taking any salary yourself, subsequent to having become aware of insolvency, could lead you open to charges of wrongful trading.

We suggest giving us a call if you’re in financial difficulty for a calm, informed conversation about your situation with no strings attached. We’re here to help.


You can’t avoid liquidation costs entirely, although the directors won’t have any personal costs if there are sufficient company assets. The purpose of liquidation is to sell assets and distribute the proceeds to creditors, so some fees and expenses are inevitable.

Since the law requires the involvement of a licensed Insolvency Practitioner (IP), DIY liquidation isn’t an option. Directors must collaborate with a qualified IP to ensure the correct process.

If a company lacks assets to cover liquidation costs, directors can explore options such as personal financing or payment plans, but seeking professional advice is crucial to determine the best solution. In rare cases, directors sometimes have to take personal bankruptcy if there is a substantial deficit.

Yes, the liquidator can negotiate with creditors to reach agreements on payment terms or settlements that may help reduce overall liquidation expenses.