Is a Business Considered Marital Property?
April 2025
When a couple divorces, one of the most important financial issues to resolve is how their assets will be divided. This can include property, pensions, savings, and in some cases, a business. Whether or not a business is considered marital property depends on several factors, including when it was established, how it was run during the marriage, and the extent of each spouse’s involvement.
This summary provides general information and does not constitute legal advice on any individual circumstances.
In the UK, a party’s interest in a business can be treated as matrimonial property during divorce proceedings, particularly if it was founded or significantly developed during the marriage. This applies even where one spouse is the sole director or shareholder. If both parties contributed to the business, whether financially, through unpaid work or by supporting the household while the business grew, the party’s interest in the business may be considered part of the matrimonial pot and subject to division.
Even if the business was set up by one spouse before the marriage, it is not automatically excluded from consideration. If the value of the business increased during the marriage or if it generated income that supported the couple’s lifestyle or funded other joint assets, the court may take that into account when determining a fair financial settlement.
The court’s approach is always to achieve fairness, and each case will depend on its specific facts. This includes the length of the marriage; the roles each party played and how intertwined the business is with the family’s finances. In longer marriages, or where the business formed a key part of the couple’s financial life, it is more likely to be treated as a marital asset.
It is also important to note that the court may not divide the business itself but could instead offset its value against other assets, such as the family home or savings, in order to award one party their share. For example, one spouse may retain the business, while the other receives a greater share of the equity in the family home or pension provision.
How Is a Business Valued in Divorce?
If a business is to be considered in the divorce settlement, it will usually need to be professionally valued. This is typically carried out by a forensic accountant who will assess the business’s assets, liabilities, income, and overall worth.
Valuation can be a complex process, particularly where the business has intangible assets or relies heavily on the individual spouse’s involvement. It is important that both parties receive independent advice and have a clear understanding of the business’s financial position before reaching any agreement.
Can a Business Be Split in a Divorce?
Although the court has the power to order the sale or transfer of business interests, it typically aims to avoid disrupting a trading business. In most cases, the business will remain with the spouse who is most involved in it, with the other party receiving compensation in other ways.
If both parties were active in the business, it may be possible to continue running it jointly, but this is rare following divorce. The court will usually prefer a clean break and financial independence wherever possible, which may involve one spouse buying out the other’s share.
In some situations, deferred payments or ongoing maintenance may be agreed to reflect the value of the business where there are insufficient other assets to balance the settlement immediately.
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