How does the 2022 no-fault divorce reform work?

Divorce, Dissolution and Separation Act 2020 (effective April 2022) removed fault-based grounds. Either party can apply citing "irretrievable breakdown" - no need to allege adultery, behaviour, or separation period. Application → 20-week reflection period → conditional order → 6 weeks → final order. Total process minimum 26 weeks (6 months) - longer if finances unresolved.

When does CGT spousal exemption end on divorce?

From 6 April 2023 (Schedule 1 FA 2023): spouses now have 3 tax years from year of separation to transfer assets at no-gain-no-loss (was previously only the tax year of separation). After 3 years, normal CGT applies on transfers. Critical for property + investment transfers - plan within window to avoid CGT triggers on splitting assets.

How are pensions split on divorce?

Three main mechanisms: (1) Pension Sharing Order - splits pension pot at decree absolute, ex-spouse gets named percentage transferred to their own pension; (2) Pension Attachment Order - ex-spouse receives % of pension payments when other spouse retires (less common, dies with original holder); (3) Offsetting - one spouse keeps full pension, other takes more of other assets (house, savings). PSO most common for substantial pensions.

How much does divorce cost financially in the UK?

Court fee £593 (2026/27). Solicitor fees: £1,000-£3,000 each for amicable, £5,000-£20,000 each for contested. Mediation: £200-£500 per session, typically 4-6 sessions. Total amicable: £3,000-£8,000 per couple. Contested with court hearings: £20,000-£100,000+. DIY divorce (no solicitor, just paying court fees): £593.

What is the standard financial settlement on UK divorce?

No formula - judges apply Section 25 Matrimonial Causes Act 1973 considerations: income + earning capacity, financial needs, contributions, age + duration of marriage, standard of living, conduct (rarely relevant). Long marriages (15+ years): typically 50/50 split of total assets unless special circumstances. Short marriages: often each keep what they brought. Children's needs take priority.

How is child maintenance calculated?

Child Maintenance Service formula: 12% of gross paying parent income for 1 child, 16% for 2, 19% for 3+. Reduced by number of "shared care" nights with paying parent (reductions kick in at 1+ nights/week). Adjusted for other children paying parent supports. Voluntary "Family-Based Arrangement" common alternative - more flexible but no enforcement.

What happens to Marriage Allowance on divorce?

Stops from the date of separation. The lower-earner partner must inform HMRC via Personal Tax Account or Marriage Allowance hotline. If not cancelled, HMRC will recover the £252/year benefit via PAYE adjustment retrospectively. Backdating: Marriage Allowance can be claimed for the 4 tax years before divorce if both qualified.

Do I need to update my will after divorce?

Yes urgently. Divorce automatically revokes any gifts to ex-spouse in will. If your will leaves everything to spouse + then doesn't name alternative, you die intestate (rules of intestacy apply). Pension nominations, life insurance beneficiaries, joint bank accounts - all need explicit review + update. Many people miss these and ex-spouse inherits unintentionally.

How does divorce affect mortgage + property?

Three options: (1) One spouse buys out other (typically requires remortgage), (2) Sell property + split proceeds, (3) Continue joint ownership with one living there until trigger event (children growing up). Each has tax + practical implications. Mesher Order: court order deferring sale until specific future event - common where children involved.

What about Inheritance Tax on divorce?

Spouse exemption ends from divorce date. Transfers between spouses during marriage IHT-exempt. After divorce: ex-spouses are not spouses for IHT - transfers may trigger IHT consequences. If divorce financial order requires ongoing maintenance + property transfers, structure carefully. Some property transfers in financial settlement are exempt under specific divorce provisions - take specialist advice.

Practical guide

UK Divorce Financial Planning Complete Guide 2026

Comprehensive UK divorce financial planning - no-fault divorce process, CGT spousal exemption rules, pension sharing orders, child maintenance formula, IHT implications, will updates.

The financial impact of UK divorce

Divorce triggers multiple tax + financial events:

CGT spousal exemption ends after 3 tax years from separation
Pension sharing or offsetting
Property transfer or sale
Child maintenance obligations
Will + nomination updates
Marriage Allowance cancellation
IHT spouse exemption ends

The 3-year CGT window (most critical)

From 6 April 2023 (Schedule 1 Finance Act 2023):

Spouses have 3 tax years from year of separation to transfer assets at no-gain-no-loss
Previously limited to tax year of separation only
If financial agreement signed during this period, transfers under Court Order or formal Agreement are no-gain-no-loss
After 3 years, transfers become CGT-triggering disposals

Critical for high-value property + investment portfolios. Plan asset transfers within window.

Pension sharing on divorce

Pension Sharing Order (most common)

Splits pension pot at "Decree Absolute" / Final Order
Ex-spouse receives named % transferred to their own pension
Pension shared is separate from inheriting spouse, cleanly broken
Most common mechanism for substantial pensions

Offsetting

One spouse keeps full pension, other takes more of non-pension assets (house, savings)
Requires valuation of "pension benefit" at the time of separation
Useful when one spouse needs cash now + other needs pension wealth

Child maintenance formula

Children	% of gross paying parent income
1 child	12%
2 children	16%
3+ children	19%

Reduced if paying parent has overnight shared care. £156k+ income: higher amounts may apply via court order.

Will + nomination updates (often forgotten)

Will: Divorce revokes gifts to ex-spouse but not whole will - rewrite urgently
Pension death nominations: Update to nominate children/family instead of ex-spouse
Life insurance beneficiaries: Re-assign
Joint bank accounts: Close + restructure
Joint mortgages: Refinance to sole name
Joint property ownership: Sever joint tenancy if planning differently

Frequently asked questions

How does the 2022 no-fault divorce reform work?
Divorce, Dissolution and Separation Act 2020 (effective April 2022) removed fault-based grounds. Either party can apply citing "irretrievable breakdown" - no need to allege adultery, behaviour, or separation period. Application → 20-week reflection period → conditional order → 6 weeks → final order. Total process minimum 26 weeks (6 months) - longer if finances unresolved.
When does CGT spousal exemption end on divorce?
From 6 April 2023 (Schedule 1 FA 2023): spouses now have 3 tax years from year of separation to transfer assets at no-gain-no-loss (was previously only the tax year of separation). After 3 years, normal CGT applies on transfers. Critical for property + investment transfers - plan within window to avoid CGT triggers on splitting assets.
How are pensions split on divorce?
Three main mechanisms: (1) Pension Sharing Order - splits pension pot at decree absolute, ex-spouse gets named percentage transferred to their own pension; (2) Pension Attachment Order - ex-spouse receives % of pension payments when other spouse retires (less common, dies with original holder); (3) Offsetting - one spouse keeps full pension, other takes more of other assets (house, savings). PSO most common for substantial pensions.
How much does divorce cost financially in the UK?
Court fee £593 (2026/27). Solicitor fees: £1,000-£3,000 each for amicable, £5,000-£20,000 each for contested. Mediation: £200-£500 per session, typically 4-6 sessions. Total amicable: £3,000-£8,000 per couple. Contested with court hearings: £20,000-£100,000+. DIY divorce (no solicitor, just paying court fees): £593.
What is the standard financial settlement on UK divorce?
No formula - judges apply Section 25 Matrimonial Causes Act 1973 considerations: income + earning capacity, financial needs, contributions, age + duration of marriage, standard of living, conduct (rarely relevant). Long marriages (15+ years): typically 50/50 split of total assets unless special circumstances. Short marriages: often each keep what they brought. Children's needs take priority.
How is child maintenance calculated?
Child Maintenance Service formula: 12% of gross paying parent income for 1 child, 16% for 2, 19% for 3+. Reduced by number of "shared care" nights with paying parent (reductions kick in at 1+ nights/week). Adjusted for other children paying parent supports. Voluntary "Family-Based Arrangement" common alternative - more flexible but no enforcement.
What happens to Marriage Allowance on divorce?
Stops from the date of separation. The lower-earner partner must inform HMRC via Personal Tax Account or Marriage Allowance hotline. If not cancelled, HMRC will recover the £252/year benefit via PAYE adjustment retrospectively. Backdating: Marriage Allowance can be claimed for the 4 tax years before divorce if both qualified.
Do I need to update my will after divorce?
Yes urgently. Divorce automatically revokes any gifts to ex-spouse in will. If your will leaves everything to spouse + then doesn't name alternative, you die intestate (rules of intestacy apply). Pension nominations, life insurance beneficiaries, joint bank accounts - all need explicit review + update. Many people miss these and ex-spouse inherits unintentionally.
How does divorce affect mortgage + property?
Three options: (1) One spouse buys out other (typically requires remortgage), (2) Sell property + split proceeds, (3) Continue joint ownership with one living there until trigger event (children growing up). Each has tax + practical implications. Mesher Order: court order deferring sale until specific future event - common where children involved.
What about Inheritance Tax on divorce?
Spouse exemption ends from divorce date. Transfers between spouses during marriage IHT-exempt. After divorce: ex-spouses are not spouses for IHT - transfers may trigger IHT consequences. If divorce financial order requires ongoing maintenance + property transfers, structure carefully. Some property transfers in financial settlement are exempt under specific divorce provisions - take specialist advice.