Divorce With a Business Involved: How Does It Work In The UK?

When it comes to financial agreements, divorce proceedings can become a bit more complicated if one or both former partners own a business, and often questions arise as to who pays who, and for what. The court will decide the fairest way to divide the matrimonial assets equally, depending on the individual circumstances and responsibilities of each party, but what exactly is involved and what do you need to know? 

Are Businesses Considered a Financial Asset?

In the main, businesses are included in any assessment of the financial assets of the marriage. This is the case even if one partner established the business before getting married or if the other partner had no involvement in the company. More so if it is a long-standing marriage and there are children to consider. Its value will be combined with all other assets, including residential and commercial property, savings and other investments before a fair way of dividing it is agreed.

Getting The Business Valued 

All types of businesses can be considered assets, from sole traders to partnerships to public limited companies. The first important step in the process when a business is involved in a divorce is for an independent accountant to be hired to assess all of the financial assets. It is preferable if this is done jointly. The accountant will then look at all aspects of the business, including earnings, profits, property etc and value it accordingly. They will also be able to offer guidance on the available options and any other financial considerations, such as tax liabilities.


How Can a Business be Divided Fairly?

Courts will look at the overall picture when it comes to making a decision on a fair division of finances and will take into account both the type of business and any other matrimonial assets, for example, the family home. Where possible, they will offset the value of the business against other assets to ensure that it is not affected.  Another option is to make provision to share the income from the business in an arrangement known as spousal maintenance or alternatively, if the finances can be raised, for one spouse to buy the other out.

Will The Business Have to be Sold?

It is not common for a business to be sold as a result of a divorce taking place. The reason for this is that it is usually providing a necessary source of income for the separating couple and any dependents. The court would only make an order for the sake of the business if all other options had been exhausted and no agreement reached, which rarely ever happens. 

How Can You Protect Your Business?

Pre-nuptial and post nuptial agreements can carry some weight in divorce proceedings as long as both parties were given independent financial advice before signing one, but they are not technically binding and are still dependent on whether they are deemed to be fair. The court will make the final decision about that. If there are children involved then their needs would most certainly have to be taken into consideration going forward, along with the living standards to which the family had become accustomed and any ongoing financial responsibilities. 


Although it may at first appear that your business could be a risk during a divorce, business owners can take solace in that courts are not looking to sell companies to achieve a fair financial settlement. They will take into account the full picture and look at other finance-related facts too. However, it is still wise, even if you are not going through a divorce, to consider the ways in which you can protect it for the future.