For over 50 years, family lawyers dealing with finances on divorce have been guided by the principles of Section 25 of the 1973 Matrimonial Causes Act (MCA), alongside certain case law where these principles have been applied in specific contexts. The 2004 Civil Partnership Act mirrored the guidance given in the MCA, meaning civil partners have the same remedial procedure when dividing finances as spouses do.
Section 25 lays out the list of factors that the court will consider when deciding the division of a couple’s finances, including:
- The welfare of any children (under the age of 18) – the first consideration of the court
- The length of the marriage
- The income capacity of each party
- Age and health of both parties
- Financial and non-financial contributions
- Standard of living enjoyed during the marriage
One of the factors that has contributed to the need for clarification through case law over the past five decades, however, is (2) (b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future.
The principles of ‘needs’ and ‘sharing’ have underpinned financial remedy proceedings and the advice family lawyers have been able to give to clients over the years. However, they are hard to defined and there is no set objective under the MCA 1973. Case law over the last 50 years has developed the notion of ‘fairness’ in financial settlements, but it is still widely interpreted and there is not the clarity needed at present to give the advice many couples need when in a state of anxiety, frustration and tension.
Understand more about the current law on divorce needs and sharing in our latest advice.
Of course, in most standard financial cases, the concept of needs will provide the backbone for negotiation. In high-net-worth cases, the sharing principle may apply, but only once the needs of each party have been met will leftover matrimonial assets be divided equally. But what ‘needs’ really means depends on the individual case, and this can be hard to explain to clients when the prevailing belief is that ‘everything is split 50/50 in divorce’.
What are the proposals for a change in the law on finances on divorce?
In early June 2026, the Government launched a consultation titled ‘A fairer end to relationships’. This consultation explores a number of features of family breakdown and how financial, practical, and to some extent, emotional, issues are dealt with under the law in England and Wales. The most ‘media hype’ has surrounded potential legal protections for unmarried couples upon separation or the death of one party where they die intestate.
However, underpinning those proposals are discussions for reform of divorce finances, particularly putting into place a codified model for the needs and sharing principle. The Government understands that the idea of ‘fairness’ is often vague and unhelpful and that more structure could be implemented through codifying the already established needs and sharing principles.
The consultation proposals explore having set statutory objectives for sharing and for needs. Importantly,
‘The needs of each party should be met in such a way as to enable transition to independence for both parties, as far as resources allow’
How this would be applied, in order of priority, would be:
- Considering the needs of children first
- Considering the parties’ capital and income needs, including housing and pension
- Considering discretionary needs e.g. lifestyle luxuries
All of these factors would be benchmarked against the couple’s standard of living through the marriage, as well as wider circumstances such as illness or disability.
Essentially, the factors applied to decision-making would remain largely the same in terms of needs but would be enshrined in statue. Furthermore, there would be a new ‘compensation’ factor, where the court would be required to take into account any economic disadvantage suffered by a party, for example where one party has stepped back from a career to raise children or support the household with non-financial contributions.
Regarding sharing, its objective, the Government proposes, is for each party to benefit equally from an equal division of the matrimonial assets. This should reflect the financial interdependence that typically characterises a marriage. The standards applied to matrimonial and non-matrimonial property have been set out in the Supreme Court’s judgment in Standish v Standish [2025]. A considerable moment in family law, this judgment provided clarification on what should be considered under each of these headings, and the circumstances in which an asset can transition from being non-matrimonial to matrimonial, through a process coined ‘matrimonialisation’.
Importantly, the Government queries whether sharing should be the first principle, i.e. the starting point is a 50/50 split of the matrimonial assets, as is often assumed. A codified needs principle would be applied where an equal sharing would not allow needs to be met, for example where one party’s income capacity is far below the other. The key question is whether sharing or needs should be considered first.
Why should the law on divorce finances be changed?
The proposals to codify needs and sharing have the potential to make financial remedy law more transparent, predictable and accessible for separating couples.
Placing the core principles into legislation would give clients a clearer picture of how the court approaches financial settlements, helping them make more informed decisions from the outset.
Greater clarity could also lead to more productive negotiations. When both parties have a better understanding of the legal framework and the factors a court is likely to consider, there is less scope for unrealistic expectations or entrenched positions. This can encourage earlier, more constructive discussions and increase the likelihood of reaching an agreement without the need for lengthy court proceedings.
Codification may also improve consistency. Although family judges already apply the established principles of needs and sharing, setting them out in statute could promote a more uniform approach across cases while still allowing the court sufficient discretion to deal with individual circumstances.
For family lawyers, a clearer statutory framework would provide a stronger foundation for advising clients and managing expectations. It could also make alternative forms of dispute resolution, such as mediation, solicitor-led negotiation and arbitration, more effective, as parties would be negotiating against a more clearly defined legal backdrop rather than relying on interpretations of extensive case law.
Codifying these principles is unlikely to remove the court’s discretion entirely, nor should it. However, by making the law easier to understand and apply, the proposals could help separating couples resolve financial matters more efficiently, with greater confidence in the fairness of the process.
What are the potential drawbacks of reforming the law?
Nevertheless, there is never going to be complete certainty for divorcing couples. Every case is unique and fact-specific. A codified model could create the expectation of certainty and transparency where the reality works out differently due to court discretion or unexpected complications. Even where needs and sharing, and compensation, are set out in statute, there is still a need for legal interpretation. This could potentially cause more disputes than it solves. If the legislation oversimplifies complex legal concepts, there is a danger that separating couples will underestimate the nuances of their own cases. Rather than encouraging settlement, parties may become more entrenched in their positions if they believe the statute supports their interpretation, making negotiations more difficult.
Another concern is that codification could inadvertently reduce the flexibility that has long been one of the strengths of English family law. The current system has evolved through decades of case law, allowing judges to adapt principles to changing family structures and societal expectations. A statutory framework, however carefully drafted, risks becoming overly prescriptive or quickly outdated, requiring further legislative reform to keep pace with developments.
The challenge for the Government will therefore be striking the right balance: providing greater clarity without sacrificing the flexibility and judicial discretion that enable courts to reach fair outcomes in a diverse range of family circumstances.
Expert advice from one of our solicitors
Anu Kaur, a Partner in our family law office in Wimbledon, explains the next steps regarding divorce finance reform.
“The law could certainly benefit from consistency, certainty and predictability; however we should not lose sight of preserving judicial discretion to ensure parties are dealt with fairly relative to their circumstances.
“Whilst we are still in these very early stages, the important thing is to ensure that clients are advised effectively according to the current principles. In all cases, fairness is the goal. Fairness can only be achieved through a thorough understanding of the parties’ financial landscape, through full and frank financial disclosure.
“Negotiations should, wherever possible, be kept out of the court system, utilising NCDR methods.”
Every divorce is unique, because every marriage is unique. Reform will not change that fact, if it does come to fruition. Therefore, the role of family lawyers is as important as ever in interpreting the law according to the nuances of individual cases, and providing exceptional, tailored advice to each client.
Seeking expert legal advice from a family lawyer will be the best way to understand as much as possible about how the process works, and how other similar cases have been settled in the past.
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