The short answer
A liquidator’s fees can be charged on a time-cost basis (hourly rates), as a fixed amount, or as a percentage of assets realised — or a mix. The basis must be approved by creditors (or a creditors’ committee), and where time costs are used the liquidator must provide a fee estimate first, under the Insolvency Rules 2016. Creditors can challenge fees they consider excessive in court.
Liquidator fees are not arbitrary — they are set on a defined basis, disclosed in advance, and approved by the people the money would otherwise go to: the creditors. This guide explains the three charging methods, how approval works, and the protections built into the Insolvency Rules 2016.
Liquidator fees at a glance
- Time-cost basis Hourly rates for work done
- Fixed basis A set, agreed amount
- Percentage basis A share of assets realised
- Approved by Creditors or a committee
- Required first A fee estimate (time costs)
- Governed by Insolvency Rules 2016
The three ways a liquidator can charge
Under the Insolvency Rules 2016, a liquidator’s remuneration can be fixed on one of three bases, or a combination of them:
- As a percentage of the value of assets realised or distributed.
- By reference to time properly spent by the liquidator and staff, charged at agreed hourly rates.
- As a set amount — a fixed fee for the whole job.
The basis chosen should fit the case: a percentage suits asset-heavy cases, while time-cost suits unpredictable, dispute-prone ones. Disbursements — such as statutory advertising in The Gazette, bonding, agents’ and legal fees — are charged separately on top.
Who approves the fees
A liquidator cannot simply set their own pay. The basis of remuneration must be approved — usually by a decision of the creditors, or by a creditors’ committee where one is formed. Where the work is to be charged on a time-cost basis, the liquidator must first issue a fee estimate setting out the anticipated work and cost, and cannot exceed it without further approval. This puts creditors in control of what the office-holder is paid.
| Basis | How it’s charged | Best suited to |
|---|---|---|
| Time-cost | Hourly rates × time spent | Complex or disputed cases |
| Fixed | One agreed amount | Simple, predictable cases |
| Percentage | Share of realisations | Asset-heavy cases |
Disbursements — the costs beyond the fee
The remuneration is only part of the picture. On top of the liquidator’s fee sit disbursements — the out-of-pocket and third-party costs of running the case. Category 1 disbursements are direct external costs such as statutory advertising, the liquidator’s bond, and court fees, which can be drawn without separate approval. Category 2 disbursements include shared or internally recharged costs and generally require the same approval as the fee. Specialist costs — solicitors, valuers, auctioneers and agents — are also charged on top where the case needs them. Understanding this split is why it is always worth asking whether a quoted figure is the fee, the disbursements, or the whole expected cost.
Challenging fees you think are too high
Creditors who believe a liquidator’s remuneration or expenses are excessive can apply to the court to have them reviewed and, if appropriate, reduced. The office-holder must also report regularly to creditors on the work done and fees drawn. These safeguards exist precisely because the fee comes out of money that would otherwise go to creditors. For how fees fit into the overall bill, see our liquidation cost guide, and to understand who carries out the work, see what is an insolvency practitioner.
Want clarity on what a liquidator would charge?
A licensed insolvency practitioner can explain the fee basis for your case and provide an estimate before anything is agreed. A confidential call is the place to start.
Frequently asked questions
How are liquidator fees calculated?
On a time-cost, fixed or percentage basis — or a mix — under the Insolvency Rules 2016. Disbursements such as advertising and bonding are charged separately.
Who approves the liquidator’s fees?
The creditors, or a creditors’ committee where one exists. For time-cost work, a fee estimate must be provided and approved first.
What is a fee estimate?
A required statement of the work the liquidator expects to do and what it will cost. On a time-cost basis the liquidator cannot exceed it without further approval.
Can creditors challenge the fees?
Yes — creditors who consider the remuneration or expenses excessive can apply to the court to have them reviewed and reduced.
Sources & further reading
- GOV.UK — Liquidate your limited company
- The Insolvency (England and Wales) Rules 2016 — remuneration of office-holders
- Insolvency Act 1986 — powers and duties of liquidators
- The Insolvency Service — guidance for company directors
- ICAEW / IPA — licensed insolvency practitioner registers
This guide is general information, not formal insolvency advice. Your situation must be assessed by a licensed insolvency practitioner before you act.