Where a business was established or built up during a marriage, it will form part of the matrimonial assets. These assets are divided on divorce, with the starting point a 50:50 split. However, it is often possible to avoid sharing a company, and the courts will look to see whether any alternative option is available. If a marriage is ending and you own a limited company, whether or not your spouse can take half of the company depends on your circumstances.

If a business was created fully before the marriage, then the court may find that it does not form part of the matrimonial assets. However, this does not mean that it is automatically protected. Should it be necessary to provide fairly for the other party or to provide for any children of the relationship, the court will do what it feels is required to achieve this.

Below, we take a look at family owned business and divorce, examine the options available that mean you may be able to avoid selling or splitting your organisation and how to go about protecting family business on divorce.

Is a Limited Company Considered a Matrimonial Asset?

A limited company is usually considered a matrimonial asset on divorce. If it was established or expanded during the marriage, then the courts will treat it as a matrimonial asset. Working in your business during marriage can be enough for it to be considered a matrimonial asset, even if it was established before the marriage.

Is My Spouse Entitled to Half of My Business?

There is no automatic entitlement to half of the matrimonial assets on divorce; instead, the courts will look at how both parties can be provided for fairly. If a spouse is in a weaker financial position, for example, because they have given up their career to raise children, then the court may well award them a larger share of the assets in compensation.

If you have a business that you established and that you run yourself, then there may be options available that mean you do not have to sell or split it.

How is a Limited Company Divided in a Divorce Settlement?

The courts will aim to protect a profitable business where possible, to allow it to continue producing an income.

The first step is to value all of both parties’ assets, including the business. Liabilities are also valued, and this information exchanged.

It is often possible to find a solution that does not require the company to be divided, but if this is not possible, then one party could receive shares in the business. Selling the business is generally only a last resort option.

There are several ways in which a spouse could retain the business, as follows:

Giving up Marital Assets

The easiest option is offsetting, where the other party is awarded a larger share of other assets instead. For example, the spouse who does not have a share in the business could have the matrimonial home, savings and pension provision.

One Party Buying Out the Other

It may be possible for the party wishing to retain the business to buy out their spouse. This could involve raising finance.

Selling the Company

Where no other option exists, or the person working in the business wishes to start again or go in a different direction in the future, the company can be sold or liquidated and wound up.

Ongoing Maintenance Payments

If a business is producing a steady income, then the courts may consider awarding maintenance to the spouse who will not have an interest in the company. The other spouse is then required to make monthly or other periodical payments to the other party. This could be without end or for a fixed period of time. The payments can be made from business income or, if the spouse moves to a job, from their salary.

Is There a Difference in Divorce Between a Sole Trader, a Partner in a Small Business or a Limited Company Director?

The type of business does have an effect on the way in which it is treated in divorce.

A sole trader is when you and your business are considered as a single legal entity. All business assets and liabilities are valued and this, together with the business income, is taken into account by the court when making an order.

With a partnership, a share is owned in accordance with the partnership agreement. The court will look at the value of the share held by the spouse.

In a limited company, any assets belong to the company. The company directors own shares in the company, and it is this share ownership that will dictate who owns the company. The shares will be valued and this figure used in the divorce calculations.

Valuing a Company During Divorce

It will be necessary to have a professional valuation prepared for the purposes of negotiating a financial agreement on divorce. Couples often share a single joint expert, which can reduce the costs.

There are different valuation methods, including:

• Asset-based, looking at the net value of the business’s assets
• Income-based, looking at profits
• Market-based, taking into account how much similar businesses have sold for

Key factors that are taken into account when preparing a business valuation include:

• Liquidity and cash flow
• Key person implications, for example, if the business relies on one person
• Marketability restrictions, for example, if minority shareholders could prevent a sale at full market value

What Are the Tax Implications of Giving Away Assets?

Giving away assets does not put them beyond the reach of the courts. The gift can be undone, or your spouse might receive a larger share of the remaining assets by way of compensation. The court can also penalise someone for this, for example, by requiring them to pay their spouse’s legal costs as well as their own.

Hiding assets and perjury are unlawful and can lead to fines or even a prison sentence.

If assets are given away, they are treated as a sale at market value and will trigger tax liabilities accordingly, for example, Capital Gains Tax. Transfers between spouses are generally considered “no gain, no loss” (TCGA 1992 s58), and there are rules about timing once a couple separates.

How Can I Protect My Limited Company in a Divorce?

It may be possible to protect your business, both before and during your marriage. The main options include:

Prenuptial and Postnuptial Agreements

Putting a prenuptial agreement in place gives you the reassurance of knowing what is likely to happen, should you divorce. It can also help you and your future spouse to have difficult conversations early on and decide how assets will be divided, if your relationship were to end.

If you are already married, you can put a similar agreement in place, a postnuptial agreement.

Before entering into this type of agreement, you and your partner need to fully disclose all of your assets and liabilities to each other, and you both need to take independent advice before signing.

While prenuptial and postnuptial agreements are not legally binding, the courts will often follow their terms when making a financial order on divorce, provided that both parties are fairly provided for.

Keep Business and Household Finances Separate

Keeping everything relating to your company separate, having separate accounts for your home life and not involving your spouse in the business can create an element of separation. Should your spouse work for the business, the court may find that they have a larger entitlement to it.

Amend Articles of Association and Shareholders’ Agreement

Check that your articles of association and shareholders’ agreement reduce the risk of shares being transferred to your spouse. It is possible to draft these to prohibit share transfer to a former spouse.

Find a Good Divorce Solicitor

If you are facing the breakdown of your relationship, it is crucial to use a divorce solicitor with a sound reputation and expertise in dealing with business assets. They will be able to go through your options with you, discuss what you might be able to agree on and work to find an out of court solution.

Make Sure Your Bookkeeping and Accounts Are in Order

Having clear and up to date accounts and other records will not only make the financial disclosure and business valuation process easier, it will also demonstrate that you are dealing openly and honestly with matters, and not hiding anything. The courts can penalise individuals who attempt to obfuscate. Failure to fully disclose assets means that there is a risk of the court overturning an order and making a new one in the future.

Is Legal Advice Required When Divorcing as a Limited Company Owner?

You are strongly recommended to seek legal advice from an expert business and divorce solicitor before you divorce. You should have a financial order put in place at the same time. Without this, your former spouse could make a claim in the future and, should your business be much larger, they could ask for a bigger share of your assets.

My Business Was Established Long Before I Married; Will This Change How Much My Spouse is Entitled to?

The courts may consider that a previously established company is not a matrimonial asset, however if you worked on the company during the marriage, it is still likely to be taken into account. If your marriage was lengthy, or your spouse cared for children or ran the household, freeing you up to focus on your business, then the court will consider this when deciding how to split your assets.

How Does a Freezing Order Stop My Spouse From Devaluing Assets?

A freezing order prevents specific assets from being moved, dealt with or spent, and can cover bank accounts, property, shares and investments. It can stop someone from moving or hiding assets and aims to preserve them pending finalisation of a financial order.

Can I Sell My Company If I Am Getting a Divorce?

You can sell your company for a fair market value if you are divorcing. The sale proceeds will be treated as a matrimonial asset in the same way that the company would have been.

If a freezing order exists, then a sale will not be possible until this is removed.

Can I Set up a Company During a Divorce?

It is possible to set up a company during the divorce process, but you need to bear in mind that it will be treated as a financial resource. If you are not yet divorced, then you can consider a separation agreement to try to protect the new enterprise.

Winding up a Company on Divorce

If you are winding up your company, you need to ensure that you obtain a fair market value for the assets. It is usual to appoint a professional valuer so that you can show you achieved the right price. The proceeds will be assessed by the court when the financial order is made.

Contact Our Divorce Solicitors

If you have questions about protecting family business on divorce, our team will be able to advise you. You can ring us on 0300 303 2071, email us at info@witansolicitors.co.uk or fill in our contact form and we will talk through your situation with you and discuss how we can assist. We have offices in Birmingham, Northampton, London and Wellingborough.

FAQs

How Can You Protect a Limited Company From a Divorce?

Options for protecting your business from divorce include:

• A prenuptial or postnuptial agreement
• Keeping business activities and income separate from your home or shared money
• Do not involve your spouse in the business
• Updating corporate documents to stop a share transfer to your spouse
• Offsetting your company against other assets, so that your former partner could receive the matrimonial home and investments, while you retain the company
• Paying spousal maintenance

What Am I Entitled to in a Divorce If My Husband Has a Company?

The court will make a fair division of assets, taking into account the factors at Section 25 of the Matrimonial Causes Act 1973, as follows:

• The income, earning capacity, property, and other financial resources available to the parties, both now and in the foreseeable future, to include any potential increase in earning capacity that it would be reasonable for the parties to take steps to acquire
• The financial needs, obligations, and responsibilities the parties have, now and in the foreseeable future
• The standard of living enjoyed by the family during the marriage
• The parties’ ages and the duration of the marriage
• Any physical or mental disability either party has
• The contributions to the family’s welfare made by each party during the marriage and in the foreseeable future, including looking after the home or caring for the family
• The conduct of the parties, where it would be unfair to ignore this
• The value of any benefit which the parties will lose because of the divorce

Where the court considers it necessary, it can order spousal maintenance to be paid, or offset the value of the company against another asset, for example property and investments, so that you receive a larger share of these, while your spouse retains the company.

How is a Limited Company Handled in a Divorce?

A limited company will be valued prior to divorce and taken into account when considering division of assets.

Is a Spouse Entitled to Receive Half of All Assets in a Divorce?

The court will look at what it considers to be a fair division of assets. While the starting point may be a 50:50 split, if one party is in a weaker financial position, then they may receive a higher share of the available assets to compensate for this.

Is a Limited Company Protected From Divorce UK?

A limited company is not protected from divorce, and an individual’s share will be taken into account when a financial order is made.

Last Reviewed: Qarrar Somji, October 2026