Six months ago, the outlook for UK construction appeared bleak. Unfortunately, despite recent hints of stabilisation, many builders are still waiting for the recovery to reach the site.
The latest S&P Global UK Construction Purchasing Managers’ Index (PMI) edged up to 38.4 in June from 38.2 in May. While that represented a slight improvement, the index remains well below the 50 mark that separates growth from contraction, with housebuilding continuing to be the weakest-performing part of the industry.
Yet the impact on businesses remains stark. Construction continues to account for more company insolvencies than any other UK sector, with more than 4,000 firms entering insolvency over the past year, underlining the intense financial pressures still facing contractors and subcontractors.
The picture is equally mixed in the official data. The Office for National Statistics estimates that total construction output grew by 1.6% in the three months to April 2026. However, that increase was driven largely by repair and maintenance work, while new construction activity remained subdued.
Meanwhile, the Government’s ambition to deliver 1.5 million new homes during this Parliament continues to look challenging. Developers continue to face a combination of higher borrowing costs, subdued buyer confidence, planning delays and increasing build costs.
Although the Bank of England has begun to ease interest rates, borrowing costs remain well above the ultra-low levels on which many developments were originally financed and appraised, while lenders continue to apply more cautious criteria.
The April increases in employers’ National Insurance contributions and the National Living Wage have added further pressure to labour costs, and persistent shortages of skilled labour continue to constrain capacity across much of the sector.
Pressure on margins also shows little sign of easing. Many contractors remain tied into fixed-price contracts negotiated before labour, financing and other operating costs increased, leaving little opportunity to recover higher costs from clients.
Material prices have stabilised in some areas but remain well above pre-pandemic levels, while rising insurance premiums and intense competition for new work have further squeezed profitability. For smaller builders and subcontractors, even relatively modest increases in costs can quickly turn viable contracts into loss-making ones.
Cashflow therefore remains the defining challenge. Main contractors continue to stretch payment terms, while banks and other lenders have become more cautious. As a result, subcontractors are often expected to finance projects for weeks or even months before receiving payment. Many otherwise viable firms are finding themselves under increasing financial strain not because they lack work, but because they are financing the supply chain.
For businesses facing these pressures, seeking professional advice at an early stage can make all the difference. Timely restructuring or turnaround support can preserve value, protect jobs and provide a platform for recovery when market conditions eventually improve.
Insolvency Service Annual Report: messages for UK businesses
The Insolvency Service’s latest Annual Report is about much more than insolvencies. Behind the headline figures are some revealing insights into the changing nature of financial distress, business regulation and the wider UK economy.
One clear message is that enforcement activity continues to intensify. During 2025/26, the Insolvency Service disqualified 1,153 directors for misconduct, up from 1,037 the previous year, while the number of live company investigations increased by 39%, from 133 to 185. The Government has also committed £25 million over five years to create a dedicated taskforce targeting abusive “phoenix” companies, with 50 additional specialist investigators being recruited.
The scale of financial distress still affecting businesses and individuals is also underlined. Official Receivers handled 11,515 new insolvency cases during the year, compulsory liquidations rose to 3,660, while 48,850 Debt Relief Orders were approved following the abolition of the application fee.
Meanwhile, the Redundancy Payments Service processed 70,633 claims, paying almost £470 million from the National Insurance Fund to employees whose insolvent employers could not meet their obligations.
Perhaps most striking is the increasing sophistication of the Insolvency Service’s role. It estimates that its work returned £42.7 million to creditors and the wider economy during the year, while closer collaboration with Companies House and enhanced powers under the Economic Crime and Corporate Transparency Act are enabling investigators to identify misconduct more quickly and intervene earlier.
Around 65% of all civil and criminal enforcement outcomes during the year related to abuse of Covid-19 financial support schemes, demonstrating that regulators continue to pursue wrongdoing long after the pandemic itself has passed.
Taken together, the figures paint a picture of an insolvency regime that is becoming both more proactive and more preventative. While enforcement against misconduct remains essential, many of the businesses entering financial difficulty are still fundamentally viable.
For directors experiencing cashflow pressures, seeking restructuring advice at an early stage remains the best way to preserve options, protect value and avoid problems escalating into formal insolvency.
Has crypto come of age?
President Trump’s launch of the $TRUMP meme coin has generated plenty of headlines—and just as much ridicule. Critics dismissed it as little more than a publicity stunt, reinforcing the perception that cryptocurrency remains the financial Wild West.
Yet while attention focused on one highly speculative digital token, a much more significant story has been unfolding behind the scenes.
The real revolution is being driven not by meme coins but by stablecoins: digital currencies whose value is typically pegged to established assets such as the US dollar. Unlike Bitcoin, whose price can fluctuate dramatically in a matter of hours, stablecoins are designed to provide the price stability needed for payments, settlements and cross-border transactions.
The global stablecoin market is now worth around $260 billion, with some analysts forecasting it could exceed $2 trillion within the next three years.
Regulation is evolving just as quickly. In the US, President Trump recently signed the GENIUS Act, creating the country’s first comprehensive federal framework for payment stablecoins. Issuers will be required to back their coins with high-quality liquid assets and provide regular disclosures, bringing stablecoins much closer to mainstream financial products than speculative cryptoassets.
The UK is on a similar path. HM Treasury has published draft legislation to regulate cryptoassets, while the Financial Conduct Authority estimates that around 8% of UK adults—approximately 4.7 million people—now own cryptoassets, with awareness of digital assets rising to more than 90% of the adult population. At the same time, HMRC has begun implementing the Cryptoasset Reporting Framework (CARF). From 2027, crypto service providers will be required to report users’ transactions directly to HMRC, significantly increasing transparency and making it far harder for digital assets to escape the attention of the tax authorities.
These developments have important implications for insolvency practitioners. Cryptoassets are no longer confined to technology start-ups or speculative investors. Increasingly, they are appearing on company balance sheets, investment portfolios and within insolvency estates. Identifying, valuing and recovering those assets is becoming an increasingly important part of protecting creditors’ interests.
Recognising that trend, the Insolvency Service appointed its first specialist crypto intelligence investigator just over a year ago to strengthen its ability to trace and recover digital assets. The role reflects a broader reality: digital asset investigations are no longer exceptional. As cryptocurrencies become more widely held and more tightly regulated, tracing wallets, establishing ownership and recovering value are becoming routine elements of insolvency and fraud investigations.
None of this means cryptocurrencies have suddenly become risk-free. Volatility, fraud and market manipulation remain significant features of parts of the market. Trump’s own meme coin is evidence enough of that. But there is an increasingly important distinction between speculative cryptoassets and regulated digital payment systems. If Bitcoin represented crypto’s adolescence, stablecoins may prove to be the first convincing signs of adulthood.
For restructuring and insolvency professionals, that distinction matters. As regulation strengthens and digital assets become more embedded in the financial system, understanding how to identify, preserve and recover them is no longer a niche specialism. It is rapidly becoming another essential tool in maximising recoveries for creditors.
HMRC sharpens recovery powers
Businesses that treat unpaid tax as an informal source of working capital may find that strategy increasingly difficult to sustain. HMRC has begun using its debt recovery powers more actively, while the Government is consulting on extending them significantly.
The most immediate change is the return of Direct Recovery of Debts. This allows HMRC, subject to safeguards, to require a bank or building society to transfer money directly from the account of an individual or business that can afford to pay its tax debt but has repeatedly refused to engage.
The power was paused during the pandemic, but HMRC restarted its use on a controlled basis in September 2025 and began rolling it out more widely from April 2026. It currently applies to established tax debts of more than £1,000, after appeal deadlines have passed and repeated attempts to secure payment have failed. HMRC must also leave sufficient funds in the account and apply protections intended to prevent undue hardship.
Now the net could widen. A consultation launched in June proposes allowing HMRC to collect smaller tax debts through affordable monthly deductions from customers’ bank accounts. Debts covered are not expected to exceed £10,000, although the eventual upper and lower limits have yet to be decided. The proposed measure would again target those judged able to pay but who have persistently ignored HMRC’s approaches.
The scale of the problem explains the tougher approach. More than 750,000 tax debts, collectively worth over £2 billion, remain unpaid each year despite being at least nine months old and despite HMRC making more than ten attempts to contact the taxpayer. Meanwhile, tax debt over a year old and not subject to a managed payment arrangement rose from £5.3 billion in 2020 to £18.8 billion in 2025.
HMRC is therefore under pressure to distinguish more quickly between businesses that cannot pay and those that will not. Its latest annual report says it resolved almost £102 billion of debt during 2025/26, 5.3% more than in the previous year.
Outstanding tax debt nevertheless remained equivalent to 4.7% of receipts, against total annual revenues of £966.4 billion. HMRC has also added more than 2,100 compliance staff since Autumn Budget 2024 and plans to expand frontline compliance capacity by 5,500 officers by 2030.
This does not mean that businesses in genuine difficulty have run out of options. Time to Pay arrangements remain available where HMRC considers a repayment proposal affordable and realistic.
However, directors should not assume that silence will preserve the status quo. A business that repeatedly ignores correspondence may now face deductions from its bank account as well as familiar enforcement measures such as taking control of goods, court proceedings or a winding-up petition.
Tax arrears are rarely an isolated problem. They commonly point to falling margins, poor working-capital control or a business using VAT and PAYE deductions to meet other immediate costs. By the time HMRC begins formal recovery action, the scope for an informal solution may already be narrowing.
The direction of travel is clear: HMRC is offering structured support to businesses that engage, while acquiring more effective means of recovering money from those that do not. Directors facing mounting tax liabilities should seek restructuring advice early, before HMRC—or the company’s bank balance—removes some of the remaining choices.
As ever, the Buchler Phillips approach to business challenges is ‘workout, not bail out’. Don’t hesitate to get in touch for an exploratory chat if your business needs help. Addressing the cracks now will, in many cases, avoid the need to start again.
Our helplines below are open for free initial consultations.
Jo Milner 07990 816904
David Buchler 07836 777748
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About Buchler Phillips
Buchler Phillips is an independent, UK based corporate recovery and restructuring firm, with an impeccable Mayfair heritage dating back to the 1930s.
Led by David Buchler, former Europe and Africa chairman of global consultancy Kroll Inc, our senior team is equally comfortable advising large corporations, Small & Medium Enterprises (SMEs) or individuals. In addition to decades of experience, each of our Partners brings to any given assignment unique independent insight, free from conflicts of interest, that is often sought but rarely found by clients or co-advisors.
The firm is sector-agnostic, but has particularly strong credentials in property; financial services; professional services; leisure and hospitality; retail and consumer; UK sports; media and entertainment; transport and logistics; manufacturing and engineering; technology and telecoms.
Our activities fall broadly, though by no means exclusively, into financial restructuring, including fraud and forensic investigations; operational restructuring and turnaround; expert witness services and recovery solutions for corporates and individuals.
This newsletter is published for the purposes of general information only and does not constitute advice. Any action taken by readers upon the information above is entirely at their own risk.