Company charges
Prescribed part calculator
When a company with a floating charge goes into liquidation or administration, a slice of what the floating charge would otherwise take is ring-fenced for unsecured creditors instead. This tool works out that slice: 50% of the first £10,000 of floating-charge realisations, 20% of everything above that, capped at £800,000 or £600,000 depending on when the charge was created.
The rule
Section 176A ring-fences part of the floating charge for everyone else
Without the prescribed part, a floating charge holder can take everything left in the company once fixed-charge and preferential creditors are paid, leaving unsecured creditors, trade suppliers, landlords, HMRC's non-preferential debt, with nothing. Section 176A of the Insolvency Act 1986 fixes that by ring-fencing a set slice of floating-charge realisations for unsecured creditors before the floating charge holder gets the rest. It applies to any qualifying floating charge created on or after 15 September 2003; anything earlier isn't caught at all.
Worked example
£500,000 of floating-charge realisations, cap for charges from 6 April 2020
The prescribed part is 50% of the first £10,000 plus 20% of everything above £10,000, capped at £800,000 for a floating charge created on or after 6 April 2020, or £600,000 for one created before that date (but on or after 15 September 2003). On £500,000 of realisations: 50% of the first £10,000 is £5,000, plus 20% of the remaining £490,000 is £98,000, for a prescribed part of £103,000, well under either cap.
| Band | Amount | Rate | Contribution |
|---|---|---|---|
| First £10,000 | £10,000 | 50% | £5,000 |
| Above £10,000 | £490,000 | 20% | £98,000 |
| Prescribed part (before cap) | £103,000 | ||
| Cap applied (charge from 6 Apr 2020 or later) | £800,000 — not reached | ||
Check your own figures
Calculate the prescribed part
Free to use, nothing is saved or sent anywhere. Runs entirely in your browser.
Prescribed part
£103,000.00
50% of the first £10,000 (£5,000.00) plus 20% of the remaining £490,000.00 (£98,000.00), under the £800,000 cap.
Worked example: change the figures to your own. Formula and caps: Insolvency Act 1986, section 176A, and the Insolvency Act 1986 (Prescribed Part) (Amendment) Order 2020 (SI 2020/211). Not applicable to a floating charge created before 15 September 2003. Not legal advice.
Who this affects
The prescribed part comes out of the floating charge holder's realisations, not fixed-charge assets
It only ring-fences a slice of what a floating charge would otherwise take. Fixed-charge assets, and anything already used to pay preferential creditors (mainly employee claims and certain HMRC debts), aren't touched by this calculation. A liquidator or administrator can apply to court to disapply the prescribed part where the cost of distributing it to unsecured creditors would be disproportionate to the amount involved, but that's an exception, not the default. See the charge priority waterfall for where the prescribed part sits in the full payment order, with your own figures.
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Adam Parker
Founder of Muswell Rose Consulting Ltd, which trades as Established Finance · former Managing Director of Penny, an invoice finance business, working in mortgages, commercial finance and fintech lending since 2010 (career history).
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