Divorce and Non-Matrimonial Property

The Supreme Court has dismissed an appeal over the ownership of £80m held by a divorcing couple, finding the sharing principle does not apply to non-matrimonial property.

In this case the husband argued the £77.8m transferred to his wife in 2017 as part of a tax planning scheme were his non-matrimonial property. The parties marriage ended in 2020. The judge found in subsequent matrimonial financial proceedings,  those assets were matrimonial property and divided them 60/40 in the husband’s favour. Wife was awarded £45m.

The Court of Appeal subsequently ruled that at least 75% of the 2017 assets were not matrimonial and reduced the wife’s award to £25m. Wife appealed to the Supreme Court.

In lead judgment, Lord Burrows and Lord Stephens, with whom Lord Reed, Lord Lloyd Jones, and Lady Simler agreed, said that ‘the problem for the wife is that there is nothing to show that, over time, the parties were treating the 2017 assets as shared between them’.

The judgment added: ‘The transfer was in pursuance of a scheme to negate inheritance tax and it was for the benefit exclusively of the children.’ There was ‘no matrimonialisation’ of the assets because ‘the transfer was to save tax’ and ‘it was for the benefit of the children not the wife’. The money transferred in 2017 was ‘not being treated by the husband and wife for any period of time as an asset that was shared between them’.

The Court of Appeal was correct that none of the non-matrimonial proportion had been matrimonialised, the judgment said, adding that the 75% ‘remains non-matrimonial property and is not subject to the sharing principle’.

Upholding the decisions and order of the Court of Appeal and dismissing the wife’s appeal, the judgment said: ‘In this judgment, we have thought it important to clarify that the sharing principle does not apply to non-matrimonial property; and to explain what underpins matrimonialisation and precisely why it is inapplicable to the transfer of the 2017 assets in this case.’

The decision by the Supreme Court provides essential guidance as to when assets not originally connecting to the marriage partnership should be considered marital and also provides a framework ensuring parties do not benefit from running false arguments about whether there was an agreement to share certain assets during the currency of their relationship.

For advice on divorce and family law, please contact Safeena Tufail on s.tufail@hewetts.co.uk

Published on 03/07/2025