You’ve spent years building your business, but now your marriage is ending. Naturally, you're worried about losing everything you've created. Could your spouse claim half of your limited company? Will you be forced to sell it? What if they never even worked in the business?
The reality of divorce and business ownership in the UK is challenging. Business assets often count as matrimonial assets in divorce settlements. Even companies solely owned by one spouse can face division during a divorce.
So, is a limited company protected from divorce in the UK? The short answer - not automatically. But there are practical steps to safeguard your business.
This guide explains when a limited company becomes a marital asset and how business assets in divorce are valued. You’ll also learn what courts consider fair and how you can protect your company effectively.
In UK divorce law, matrimonial assets refer to property acquired or developed during your marriage. Courts typically view these as jointly owned, even if legally held in just one partner’s name. A limited company often falls into this category because it can represent significant value built during your marriage.
Under Section 25 of the Matrimonial Causes Act 1973, courts have broad discretion to decide fair financial settlements. They consider the overall financial resources of both parties. Including business interests.
A matrimonial asset can be anything of value gained or developed during your marriage. This includes property, savings, investments, and crucially, business assets.
The key point: even if you registered your limited company before marriage, it could still count as a matrimonial asset. If your business grew significantly during the marriage or relied on joint finances, your spouse may have a claim against the growth. More importantly, the court needs to consider the needs of the parties involved.
Pre-marital businesses aren't automatically excluded from divorce settlements. Courts look closely at whether the business increased in value during your marriage and how that growth occurred.
For example, John started his business five years before marrying Jane. During the marriage, the company’s value doubled. Jane provided childcare, freeing John to focus on work. Because Jane indirectly contributed, the court might consider part of the business a matrimonial asset.
Historically, the courts focused on direct financial contributions. Now, landmark cases like White v White and Miller v Miller have changed this view. The courts recognise marriage as a partnership, valuing indirect contributions highly.
If your spouse handled childcare, household duties, or administrative tasks, these efforts supported your business. Even subtle contributions can influence how business assets are divided during divorce in the UK.
Courts prioritise fairness and economic partnership above traditional roles when dividing matrimonial assets.
To fairly divide business assets, courts must first determine your company's accurate value. Valuing a business for divorce involves specialised approaches, typically carried out by financial experts. Courts then use these valuations to offset or divide the company's worth against other matrimonial assets.
When it comes to limited company valuation in divorce, experts rely on these main methods:
Net Asset Value (NAV):
This method calculates the total value of your company's assets minus liabilities. It works best for asset-rich businesses like property companies.
Earnings-Based Valuation (EBITDA):
EBITDA stands for earnings before interest, taxes, depreciation, and amortisation. This method assesses future profitability by examining past and projected earnings.
Discounted Cash Flow (DCF):
DCF predicts future cash flows and discounts them to a present-day value. Courts prefer this approach for businesses with predictable earnings, like consultancy firms.
Comparable Transactions:
Experts compare your company to similar businesses recently sold or valued. This provides a realistic market-based valuation.
Because business valuation can be complex, courts usually involve specialist financial professionals. A forensic accountant or jointly appointed expert provides an independent valuation. Their role includes reviewing financial documents, assessing market value, and ensuring accuracy.
For instance, if one spouse undervalues the business, an expert can highlight discrepancies to the court. This helps ensure fairness and transparency.
Transparency is essential during divorce proceedings, especially concerning financial assets. Both spouses must complete Form E—a detailed disclosure statement of their financial position, including business interests.
Failure to provide accurate information can damage your credibility in court. Courts can draw negative conclusions if they suspect deliberate undervaluation or incomplete disclosure. This could lead to an unfavourable settlement or even additional penalties.
Therefore, always disclose fully and accurately. A proper, transparent disclosure ensures a fair financial settlement and avoids costly legal issues.
Many business owners worry about losing half their company in a divorce. But UK courts do not automatically split assets 50/50. Instead, the court looks at what’s fair — not just equal.
Whether or not your spouse can claim part of your company depends on the full context of your marriage, contributions, and finances.
Under English law, financial settlements follow the principle of fairness. While White v White established that equality should be the starting point, it isn’t the end of the story, it is the yardstick of.
The court considers factors under Section 25 of the Matrimonial Causes Act 1973, including:
The length of your marriage
Each party’s financial and non-financial contributions
Current and future financial need
The welfare of any children
Standard of living
Conduct
In Standish v Standish, the court decided unequal division was fair, showing that 50/50 is not guaranteed.
Yes. Even if your spouse never worked in the business, they may still have a claim. Courts consider indirect contributions like childcare or supporting your career.
Let’s say you ran the business while your spouse managed the household and raised children. The court may still treat your business as part of the marital assets.
This is especially true if the company grew significantly during the marriage, relied on shared resources, or contributed to your family’s lifestyle.
So while your spouse may not become a co-owner, they might receive a financial share or offset in the settlement.
The key point? The outcome is based on fairness, not just business involvement.
If you're worried about dividing a business in a divorce, early legal advice is crucial. Speak to our divorce specialists for tailored advice to your situation.
If you own a business, divorce can feel like a threat to everything you’ve built. The good news? There are practical legal tools that can help protect your limited company from being unfairly divided.
From agreements made before marriage to how shares are structured, several strategies exist to reduce the risk of losing control or value.
Prenuptial and postnuptial agreements are formal contracts that outline how assets, including a business, should be divided if the marriage ends.
Since Radmacher v Granatino in 2010, English courts give significant weight to these agreements — provided both parties entered freely, with legal advice, and understood the consequences.
These agreements can ring-fence business interests, especially in high-value or family-run companies.
Limitations:
They’re not legally binding like a contract. But courts often uphold them if they’re fair and meet future financial needs.
A well-drafted shareholders’ agreement can include clauses to protect your business in a divorce.
Common protections include:
Restrictions on transferring or selling shares
Pre-emption rights for existing shareholders
Compulsory share buyback options in the event of divorce
If your spouse is a shareholder, this can prevent them from selling their stake to outsiders or interfering in management.
Limitations:
It won’t prevent the court from considering your business a matrimonial asset, but it can control how ownership is handled.
A buy-out agreement allows one spouse to retain full control of the business by buying the other’s share.
This is common where both parties are involved or hold shares but only one wants to continue running the company.
Valuation is key — a fair market value should be agreed with the help of a financial expert or forensic accountant. The buy-out can be funded using savings, loans, or by offsetting other assets.
Limitations:
You’ll need liquidity or other assets to fund the buy-out.
If you want to keep your company intact, you can offer your spouse a larger share of other marital assets.
This is called offsetting — for example, they receive more of the family home, savings, or pension in exchange for giving up any claim to the business.
Limitations:
The values of assets must be comparable and acceptable to both sides. The court may adjust the split to ensure fairness.
Protecting a family business in divorce takes planning and expert advice. Many of these steps need to be put in place before problems arise. If you're already facing divorce, it’s still possible to use these tools during settlement negotiations.
During divorce, there’s a risk that one party might try to move or hide business assets. UK law provides protections to stop this, and honesty in financial disclosure is not optional. It’s a legal duty.
A freezing order is a court-issued injunction that prevents one spouse from selling, transferring, or disposing of assets — including business interests — before the financial settlement is agreed.
Courts issue them to protect business assets in divorce where there’s evidence of dishonest intent, such as:
Selling the company to a friend for below market value
Creating fake debts
Moving shares offshore
Freezing orders are usually temporary, put in place quickly, and can apply to both UK and overseas assets.
When are they granted?
You’ll need to show a real risk of dissipation and act quickly. Courts balance fairness with avoiding undue disruption to the business.
Both spouses must provide full and frank financial disclosure using Form E - a detailed legal form that lists all income, assets, debts, and business holdings.
Failure to disclose business interests accurately or completely can lead to:
Adverse inferences (the court assumes you’re hiding value)
Reopening of settlements
Legal costs and penalties
Form E includes sections on:
Business interests
Directorships
Company accounts and valuations
Loans to or from the company
If a dispute arises over company value or ownership, a forensic accountant may be brought in to verify figures.
Disclosing business finances during divorce doesn’t mean the whole world sees them.
While courts require openness between spouses, commercial confidentiality is still respected. Sensitive data disclosed in Form E can be sealed by court order or shared under confidentiality undertakings.
Key point: Transparency is non-negotiable — but it can coexist with protecting business privacy.
In high-net-worth or business-related divorces, legal tools like freezing orders and expert disclosure are essential. They ensure fair outcomes while safeguarding business integrity and privacy.
Thinking of selling or transferring your business to protect it from divorce? Be cautious. Attempting to move, hide, or undervalue business assets can backfire. It may lead to serious legal consequences.
Courts are alert to suspicious activity during divorce proceedings. If you sell, gift, or transfer a business at undervalue to avoid it being included in a financial settlement, the court can:
Reverse the transaction (known as “setting aside”)
Draw adverse inferences — assuming you're hiding assets
Adjust the settlement in your spouse’s favour
Order you to pay legal costs
Common red flags include:
Selling your business for less than it’s worth
Gifting shares to a friend or relative
Creating artificial debts to reduce company value
Transferring assets offshore without clear reason
In short, trying to manipulate business value or ownership can damage your credibility and result in a worse financial outcome.
There are legitimate reasons to sell or restructure a business — even during divorce. But if you're planning to do so, take these precautions:
Seek early legal advice
Always speak to a specialist solicitor or lawyer before making business changes during a divorce.
Keep full records and documentation
Be ready to justify the reason for the sale or transfer and show that it was necessary and genuine.
Ensure fair market value
Any sale must reflect the true value of the business. Under-valued deals raise suspicion.
Consider court approval if proceedings are ongoing
If divorce proceedings have started, consult your specialist solicitor or lawyer about applying to the court or disclosing your intentions to the other party.
Selling a business before or during divorce isn't always prohibited — but it must be done openly, fairly, and with legal oversight.
Trying to outmanoeuvre your spouse or the court will only increase your risk, delay proceedings, and harm your credibility. Transparency and proper advice are your best protections.
Divorce is difficult enough. But when both spouses are equal shareholders and directors in a limited company, things get even more complicated. A 50/50 ownership split can lead to deadlock, where neither party can make decisions without the other’s agreement.
This kind of standstill can paralyse the business, strain relationships with staff and suppliers, and cause long-term damage to company value.
When divorcing spouses each hold 50% of the shares and share director responsibilities, several problems can emerge:
Deadlock is especially common in family-owned businesses, where personal and professional lines blur.
There are legal and commercial solutions for breaking deadlock when divorcing director-shareholders can’t agree:
1. Mediation and Share Restructuring
Professional mediation can help both parties agree on restructuring the business. Options include:
One party buying out the other’s shares
Reducing one spouse’s involvement to a passive shareholder role
Appointing an independent director to manage decisions
2. Voluntary Liquidation (MVL)
If continuing jointly isn’t viable, a Members’ Voluntary Liquidation allows the company to close in a controlled way. Assets are distributed fairly, and both parties walk away.
Divorces involving business assets often benefit from resolving disputes outside of court. Alternative dispute resolution (ADR) can provide a faster, more private, and more expert-led process — ideal for complex financial cases and high-net-worth individuals.
Business-related divorce cases often involve sensitive financial data, commercial reputations, and tight timelines. ADR offers key advantages:
Confidentiality – Discussions remain private and out of the public court system
Expertise – Financial experts or senior legal professionals often lead or assist
Flexibility – Outcomes can be more creative and tailored than court-imposed orders
Speed – Avoids long waiting lists for court hearings
Let’s break down the most popular options.
Mediation is a voluntary process where a neutral mediator helps both parties reach agreement. It’s non-binding unless turned into a formal consent order. Mediation is ideal for separating couples who want to stay amicable and avoid litigation.
Good for:
Reducing conflict
Preserving business operations
Finding practical solutions together
Arbitration is a private process where a qualified arbitrator acts like a judge. Unlike mediation, the decision is binding.
Both parties agree in advance to accept the arbitrator’s final ruling. It’s a popular option in high-net-worth divorces and business disputes due to its confidentiality and authority.
Good for:
Quick, enforceable decisions
Complex asset division
Specialist involvement
A Private FDR is a mock version of a court hearing, usually hosted by a retired judge or senior barrister. It’s like a preview of what might happen in court, helping parties settle without a formal trial. Although not binding, most private FDRs lead to agreement.
Good for:
Realistic settlement expectations
Confidential legal advice
Encouraging early resolution
Yes, but it depends on the circumstances. There is no automatic 50/50 split of a business in divorce. Courts in England and Wales aim for fairness, not necessarily equality. If your spouse contributed financially or supported the business indirectly (such as caring for children or doing admin) they may be entitled to a share. The court may order a transfer of shares, a buyout, or an offset using other marital assets.
Business valuation in divorce typically uses one of four recognised methods:
Net asset value – based on company assets minus liabilities
Earnings-based valuation – uses EBITDA and multipliers
Discounted cash flow – projects future income streams
Comparable transactions – compares recent similar sales
Courts usually rely on a jointly instructed forensic accountant. The value is used to inform a fair division of assets or offsetting arrangements.
Prenups can protect your business, but they are not legally binding in the UK. However, courts will usually uphold a well-drafted and fair prenuptial agreement, especially after the landmark case of Radmacher v Granatino.
To be effective, the agreement must be fair, entered into freely, and with full financial disclosure. It should also be reviewed if circumstances change — like having children or business growth.
Transferring ownership during divorce can trigger legal issues. Courts can reverse transactions made to reduce the value of the marital pot.
If a transfer is seen as an attempt to hide or deplete assets, the court may penalise you with cost orders or adjust the settlement unfairly. If you need to sell or transfer shares, seek legal advice, ensure fair market value, and fully disclose the transaction.
Yes, a freezing order (also known as a freezing injunction) can stop your spouse from selling or moving business assets during divorce. The court may grant one if there’s evidence that your ex intends to dissipate assets.
However, you must act quickly, show genuine risk, and provide full disclosure. Breaching a freezing order can lead to contempt of court proceedings.
When spouses own 50% of a business each, divorce can create director deadlock. This may stall decision-making, disrupt trade, and harm the company. Common solutions include:
Mediation to restructure shareholdings
One partner buying out the other
Voluntary liquidation (MVL)
Court petition for a “just and equitable” winding-up
Act early to avoid costly disputes and protect the business from long-term damage.
Is a limited company protected from divorce UK? In most cases, the answer is no. A business will often be treated as a matrimonial asset, especially if it grew during the marriage or was supported by joint contributions. But that doesn’t mean you’ll automatically lose half of it.
With the right strategies — such as prenuptial agreements, shareholder protections, expert valuations, and negotiated settlements — it’s possible to retain control of your company and reach a fair financial outcome.
Early legal advice is essential. The sooner you act, the more options you have to protect your business, your finances, and your future.
Limited companies are usually included in financial divorce settlements.
Courts consider fairness, not just ownership or timing.
Prenups, postnups, and shareholder agreements can help protect business assets.
Expert valuation and full disclosure are critical.
Mediation and arbitration can resolve business-related divorces privately and efficiently.
Selling or transferring a company mid-divorce can lead to court action.
Contact our Private Family Law Solicitors for tailored legal guidance and discreet support in protecting your business during divorce. Our team has extensive experience handling divorce and business ownership in the UK. TBI Law is here to help you plan wisely and protect what matters.
