UK Divorce Financial Planning Complete Guide 2026
Divorce finances in England and Wales: the £628 fee, the no-fault process, CGT on transfers, pensions, child maintenance, Marriage Allowance and wills.
This guide covers divorce in England and Wales. Scotland and Northern Ireland have their own divorce law; the tax rules described here (Capital Gains Tax, Inheritance Tax, Marriage Allowance) apply UK-wide.
The money decisions a divorce triggers
- Transferring assets between you, and the Capital Gains Tax time limits
- Pensions: sharing, attachment or offsetting
- The family home: buying out, selling or deferring a sale
- Child maintenance
- Cancelling Marriage Allowance
- Updating your will, pension nominations and insurance
Getting the financial order before the final order
A financial order (or a consent order if you agree) can only be made after the conditional order and only takes effect after the final order. GOV.UK advises applying before the final order, because applying afterwards can have financial consequences, particularly for pensions (GOV.UK).
Capital Gains Tax on transfers between you
From 6 April 2023 (Finance (No. 2) Act 2023 s.41, amending TCGA 1992 s.58):
- Transfers are at no gain, no loss until the end of the third tax year after the tax year you stopped living together, or the final divorce order if earlier.
- Before then, the window was only the rest of the tax year of separation.
- Transfers made under a formal divorce or separation agreement or court order are at no gain, no loss with no time limit.
Source: HMRC helpsheet HS281, which also explains how Private Residence Relief can continue on a former home transferred to, or still lived in by, the other spouse.
Pensions on divorce
Pension sharing order
- Made under Matrimonial Causes Act 1973 s.24B
- Transfers a share of one spouse's pension into a pension for the other, which then belongs to them outright
- Takes effect after the final order
Attachment order
- Part of the pension is paid to the ex-spouse when it comes into payment (MCA 1973 s.25B)
Offsetting
- One spouse keeps the pension and the other takes more of the other assets, such as the house or savings
- Depends on putting a value on the pension, which is not the same as a cash value
Child maintenance: the basic rate
For a paying parent with gross weekly income between £200 and £3,000 (per Child Support Act 1991 Sch. 1 para. 2):
| Children | First £800 a week | Above £800 a week |
|---|---|---|
| 1 child | 12% | 9% |
| 2 children | 16% | 12% |
| 3 or more | 19% | 15% |
The amount is reduced if the child stays overnight with the paying parent for 52 nights a year or more. Above £3,000 a week of gross income, the receiving parent can apply to the courts for extra child maintenance (GOV.UK).
Will and nomination updates
- Will: divorce treats the ex-spouse as having died for gifts and executor appointments (Wills Act 1837 s.18A) but does not cancel the rest of the will, so review it
- Separation is not divorce: until the final order, gifts to your spouse in your will still take effect
- Pension death nominations and life insurance beneficiaries: these are not changed by divorce; update them with each provider
- Joint accounts and joint mortgages: review them with the bank or lender as part of the settlement
Related pages
Frequently asked questions
How does no-fault divorce work?
Under the Divorce, Dissolution and Separation Act 2020, for applications issued on or after 6 April 2022 you do not have to prove fault. After the court issues the application you wait 20 weeks before applying for a conditional order, then at least 43 days (6 weeks and 1 day) after the conditional order before applying for the final order that ends the marriage.
How long do separating spouses have to transfer assets without Capital Gains Tax?
From 6 April 2023, separating spouses and civil partners can transfer assets at no gain, no loss until the end of the third tax year after the tax year they stopped living together, or the date of the final divorce order if earlier. Transfers made under a formal divorce or separation agreement or a court order are at no gain, no loss with no time limit. The change was made by Finance (No. 2) Act 2023 s.41.
How are pensions split on divorce?
The main options are a pension sharing order, which transfers a share of one pension into a pension for the other spouse; a pension attachment order, which pays part of the pension to the ex-spouse when it comes into payment; or offsetting, where one keeps the pension and the other takes more of other assets. GOV.UK warns that applying for a financial order after the final order can have financial consequences, particularly for pensions.
How much does it cost to apply for a divorce?
The court fee to apply for a divorce is £628. You may be able to get help with fees if you are on benefits or a low income. Legal and mediation costs vary widely and depend on how much has to be negotiated or decided by a court.
Is there a standard financial settlement on divorce?
No. If you cannot agree, the court decides using the factors in section 25 of the Matrimonial Causes Act 1973, including each person's income, earning capacity and resources, their needs, the standard of living, their ages and the length of the marriage, contributions to the family, and the welfare of any child under 18, which comes first.
How is child maintenance worked out?
The Child Maintenance Service uses the paying parent's gross weekly income. On the basic rate (gross weekly income of £200 to £3,000) it takes 12% for one child, 16% for two and 19% for three or more on the first £800 a week, then 9%, 12% or 15% on the rest. The amount is reduced if the child stays overnight with the paying parent for 52 nights a year or more.
What happens to Marriage Allowance on divorce?
You must cancel Marriage Allowance if you divorce or legally separate, and either of you can cancel it. If the relationship has ended, the change may be backdated to the start of the tax year, so one of you may underpay tax for that year. In 2026/27 the allowance transfers £1,260 of Personal Allowance, worth up to £252 in tax.
Do I need to update my will after divorce?
Yes. In England and Wales, once the marriage is dissolved, gifts to the former spouse and their appointment as executor or trustee take effect as if they had died on that date (Wills Act 1837 s.18A). The rest of the will stands, so property meant for the ex-spouse passes under the rest of the will or, if it says nothing, under the intestacy rules. Pension nominations and life insurance beneficiaries are separate and need updating too.
What about Inheritance Tax on divorce?
The exemption for transfers between spouses or civil partners (Inheritance Tax Act 1984 s.18) applies while you are still married, including after you separate. Once the final order is made you are no longer spouses, so the exemption no longer covers gifts between you. Transfers made under a divorce settlement can be treated differently; take advice on the specific transfer.