In England and Wales, a forced sale is rare and a straight 50/50 split of the shares is rarer still. Normally the value of the business goes into the overall pot of assets, and the family finances are rearranged around it. How you handle disclosure and valuation tends to decide what that costs you.
Scotland works differently, with a narrower definition of matrimonial property, so what follows applies to England and Wales only.
Is the business a matrimonial asset?
Usually yes, at least in part, even if you set it up before you married. A business interest is a financial resource, and the court looks at all resources. The starting point for assets built up during the marriage is equal sharing.
Assets brought into the marriage sit in a different category. In Standish v Standish [2025] UKSC 26 the Supreme Court confirmed that the sharing principle applies to matrimonial property, not to non-matrimonial property. Non-matrimonial assets can still be drawn on to meet the other spouse’s reasonable needs, which in most cases decides the outcome.
So a business founded before the wedding is not automatically ring-fenced. Growth during the marriage, reinvested profits and a spouse’s contribution at home can all pull part of the value into the shared pot.
A practical tip: dig out the accounts for the year you married. Set against today’s figures, they are the most useful document in the case.
How a business is valued
Valuing a private company is not an exact exercise, and the courts say so openly. In Versteegh v Versteegh [2018] EWCA Civ 1050 and Martin v Martin [2018] EWCA Civ 2866, the Court of Appeal accepted that valuations of private companies can be fragile and need treating with caution.
This affects the cost. Two accountants using the same method can land a long way apart, and each side then pays to argue about the gap. A single joint expert, one accountant instructed by both of you, usually costs much less and carries the same weight. The court, not the expert, decides the final figure.
Sole trader, partnership or limited company
The structure changes what is actually being divided.
- For sole traders, freelancers and consultants, there is little capital value beyond equipment, goodwill and work in progress, so the argument tends to be about income rather than a lump sum.
- In a partnership, a partner’s divorce rarely forces the firm to pay anything out. Disclosure usually focuses on the partnership agreement, capital and current accounts and drawings.
- In a limited company, the shares are the asset, not the company’s own property. A company is a separate legal person, and after Prest v Petrodel Resources Ltd [2013] UKSC 34 the courts reach behind that only in narrow circumstances.
Whichever structure applies, both spouses must give full and frank disclosure. What Form E asks you to disclose includes two years of accounts, your shareholding, director’s loan accounts and any pending sale. Holding back is a false economy, because an order can be reopened if disclosure was incomplete.
Why a sale is a last resort
Courts recognise that the business pays for everything, including any maintenance ordered. Selling it is rarely the answer. The common alternatives are:
- Offsetting, where one spouse keeps the shares and the other takes a larger share of the house, savings or pensions.
- A staged buy-out, with lump sums paid by instalments over an agreed period, sometimes secured against other assets.
- A deferred share transfer: where there is not enough cash elsewhere, the other spouse may receive shares, so both share the risk and any future upside. This is known as a Wells order, after Wells v Wells [2002] EWCA Civ 476.
Offsetting involves a trade off. Cash and property are certain, private company shares are not, so a pound of business value rarely buys a pound of house.
Settling it without a contested court case
A valuation fight can cost more than the sum in dispute, and staff, clients and lenders tend to notice a long court case. Options outside court include solicitor negotiation, arbitration and family mediation, where a joint expert can be instructed just as easily. Before most financial applications to court you usually need to attend a Mediation Information and Assessment Meeting, or MIAM, unless an exemption applies. The government’s guidance on money and property when a relationship ends sets out the framework.
Making the agreement binding
An agreement between the two of you is not final on its own. It becomes binding once a judge approves it as a consent order, which can include a clean break so neither of you can claim against the other later. A court fee applies to lodge it.
The wording repays attention: how instalments are secured, what happens if the business is sold soon afterwards, and who bears the tax. Some people use a solicitor throughout, others take fixed-fee help once the numbers are agreed.
Before agreeing figures, some people get an independent view of the issues first. Family Law Service’s AI Barrister Review is an AI tool that reviews the issues in a divorce finance case in England and Wales. It draws on a library of 1,808 authorities, statutes and guidance papers. A short set of eligibility questions comes first, so nobody pays for a case it cannot handle, and the report arrives by email within 30 minutes. It costs £9.50 inc VAT at its launch price. It is not a barrister and it is not legal advice, but it can show which points are worth taking to a solicitor or your accountant.
Protecting a business before problems arise
If you are not in the middle of a separation, a few steps help later:
- Keep business and personal money separate, and pay yourself a market-rate salary.
- Keep evidence of what the business was worth before the marriage.
- Put a shareholder’s or partnership agreement in place covering what happens on a divorce.
- Consider a pre-nuptial or post-nuptial agreement. These are not automatically binding, but after Radmacher v Granatino [2010] UKSC 42 the court gives weight to one entered into freely, with disclosure and advice on both sides.
The takeaways
Your business is very unlikely to be sold or split in half. Its value goes into the pot, and the argument is about what that value is and how the other assets balance it. Early disclosure, one agreed expert and a sealed consent order usually cost far less than a contested valuation battle. It can help to speak to a family solicitor and your accountant together, since the tax and the settlement are hard to separate.
A separation also takes a toll away from the balance sheet. The Divorce Circle keeps a free guide to divorce support resources in the UK, from helplines and counselling to money and parenting help.
About the author: Jess Knauf is Director of Client Strategy at Family Law Service, part of Family Legal Ltd, which also runs Mediate UK.
