A fairer end to relationships? Government consults on major shake up of divorce finances

Last week, the Government launched a wide‑ranging consultation on reforming how finances are divided when relationships end. Titled “A fairer end to relationships”, it signals what could become one of the most significant updates to family law in England and Wales in decades. 

For many people, the financial side of divorce is confusing, uncertain, and often stressful. This consultation recognises that concern and asks whether the law needs to change to make outcomes clearer, fairer and more predictable. 

In this blog, we explain what the current law looks like, what the Government is proposing, and what it might mean for individuals and families. 

Why is reform being considered? 

The current law governing financial settlements on divorce is based primarily on the Matrimonial Causes Act 1973. While that sounds straightforward, the reality is far more complex. 

Over the last 50 years: 

• courts have developed a large body of case law 
• key principles such as “needs” and “sharing” have evolved through judicial decisions and 
• judges have wide discretion to decide what is fair in each individual case 

This flexibility can be helpful, but it comes at a cost. 

In practice, most couples never see a judge decide their case. They reach agreement, often without fully understanding what a court would do. That makes clarity even more important. However, much of the law is not written down in one place, but instead derived from leading cases, many of which involve very wealthy individuals and do not always translate easily to everyday situations.

In 2024, the Law Commission undertook a review and found that the current system: 

• lacks certainty and clarity 
• is difficult to understand without specialist advice 
• can lead to unpredictable outcomes and 
• may increase conflict and legal costs 

The Law Commission concluded that the law does not provide a “cohesive framework” in which couples can expect fair and sufficiently certain outcomes, and that uncertainty can actually drive disputes rather than resolve them. 

The Government’s view is that the law may no longer reflect modern relationships or expectations and that reform could help people resolve financial issues more easily when relationships break down. 

What is the consultation about? 

The consultation, launched on 5 June 2026, looks at three connected areas: 

• financial remedies on divorce and dissolution 
• rights for cohabiting couples when they separate 
• rights for cohabitants when a partner dies without a will 

This reflects a broader recognition that family life has changed significantly in recent decades. More couples are choosing to live together without marrying, and there is growing concern that the law does not adequately protect financially weaker partners, particularly on separation. 

This blog focuses on the first area: financial arrangements on divorce. 

The key proposal: a “codification‑plus” model 

At the heart of the consultation is a proposal known as “codification‑plus.” 

In simple terms, this would: 

• put existing legal principles (developed through case law) into statute 
• keep a level of judicial discretion, but within a clearer framework 
• introduce targeted reforms where the law is currently uncertain 

This approach reflects one of the models identified by the Law Commission, sitting somewhere between a complete rewrite of the law and leaving things as they are. It aims to strike a balance between certainty and flexibility 

What does “codification” mean? 

Currently, much of the law is not written down clearly in legislation. Instead, lawyers and judges rely on past cases. 

Codification would: 

• set out key principles clearly in an Act of Parliament 
• make the rules more accessible and transparent 
• help individuals understand their likely position earlier 

For those outside the legal profession, this could be a significant shift. At the moment, two people in broadly similar situations can sometimes receive quite different advice, depending on how their circumstances are interpreted. A clearer statutory framework could help narrow that gap and make outcomes more predictable from the outset. 

Importantly, this is not intended to be a complete overhaul. The core ideas remain familiar but will be more clearly defined. 

Key principles that could be formalised 

“Needs” - ensuring both parties can move forward 

In most cases, divorce outcomes are driven by meeting the needs of the couple (and any children). 

Under the proposed approach: 

• children’s welfare and their needs would be considered first 
• courts would take a structured approach to essential needs:  
  • housing needs 
  • income needs 
  • pension provision  
• any additional or discretionary needs (which the consultation describes as “lifestyle luxuries”) would only be considered if there was enough money to allow this. 

This reflects the reality that, for many families, there simply isn’t enough money to meet everyone’s expectations on divorce. Fairness and financial stability needs to be prioritised, rather than maintaining a lifestyle enjoyed during the marriage. 

The consultation also suggests making clearer what “needs” actually means.  This is something that is currently not defined in legislation, despite being central to most cases.  

 “Sharing” - dividing matrimonial assets fairly 

The sharing principle reflects the idea that assets built up during a marriage should usually be shared equally. 

The consultation suggests there should be a:  

• clearer definition of:  
  • matrimonial property (typically assets built up during the relationship) 
  • non‑matrimonial property (such as pre‑marital or inherited wealth) 
• starting point of equal division of matrimonial assets 

At present, these concepts are well understood by family lawyers but are not formally defined in statute. This can lead to disputes about what counts as “matrimonial” versus “non-matrimonial” property particularly in cases involving inherited wealth, family businesses or assets built up before the relationship. Putting this into legislation could reduce those grey areas and make it easier for couples to reach agreement without court involvement. 

A major shift? Qualifying nuptial agreements 

One of the most potentially significant proposals relates to prenuptial and postnuptial agreements. 

Current position 

At present: 

• prenups (and postnups) are not automatically binding 
• however they are often given significant weight and can be determinative if they are fair and certain conditions are met 

This position has developed through case law, particularly over the last 15 years.  

Proposed reform 

The consultation suggests whether “qualifying nuptial agreements” (QNAs) should be introduced. These would: 

• be legally binding nuptial agreements, provided certain safeguards were followed 
• allow couples to decide in advance how their finances should be divided if they got divorced 
• reduce uncertainty in the event of divorce 

This reflects a growing policy emphasis on autonomy and planning, allowing couples to take control of their financial arrangements rather than leaving everything to the court. 

Safeguards under consideration 

To protect against unfairness or pressure, QNAs would need certain safeguards. Being discussed are: 

• full financial disclosure by both parties 
• the need for both to take independent legal advice 
• proper timing (not signed at the last minute) 
• protection of basic needs (especially where children are involved) 

These will be familiar with anyone who already has a prenup. 

Even under this model, couples would not be able to “contract out” of meeting fundamental needs. This reflects the emphasis on fairness and protection of the vulnerable.  

Could domestic abuse be given greater weight? 

Another important aspect of the consultation is whether the law should give greater recognition to domestic abuse, including: 

• economic abuse and 
• controlling or coercive behaviour 

The Government is considering whether: 

• the impact of abuse should be more explicitly recognised in financial settlements 
• the law should better protect vulnerable individuals at the point of separation  

This builds on a wider shift in family law towards recognising that abuse is not always physical, and that financial control can have long‑lasting consequences. It also aligns with the consultation’s broader aim of ensuring that reforms protect those most at risk of disadvantage when relationships end 

A more structured approach to decisions 

Although discretion would remain, the proposed reforms aim to introduce: 

• clearer statutory guidance 
• more structured decision‑making 
• greater consistency between cases 

One of the key criticisms identified by the Law Commission was that the current law can promote dispute because outcomes are difficult to predict. A more structured framework is intended to shift the focus towards resolution rather than litigation. The hope is that this would: 

• reduce litigation 
• encourage earlier settlement 
• improve access to justice 

What difference could this make in practice? 

If implemented, these reforms could have several practical effects. 

Greater certainty for separating couples 

Individuals may be better able to: 

• understand their likely financial outcome 
• make informed decisions earlier 
• avoid unnecessary disputes 

More emphasis on agreements 

We may see: 

• increased use of nuptial agreements 
• greater confidence in negotiated settlements 

Reduced legal costs 

Clearer rules could: 

• narrow the issues in dispute 
• shorten the process 
• reduce professional fees 

But we would still not have a “one size fits all” system 

Importantly: 

• judicial discretion would not disappear 
• cases would still depend on individual circumstances 
• fairness (rather than rigid formulas) would remain central 

What happens next? 

This is only a consultation stage so this is not law.  Any reforms will require further policy development as well as new laws being passed by Parliament 

Final thoughts: a significant moment for family law 

This consultation represents a potentially major turning point. 

For many years, family lawyers have debated whether the current system: 

• is too uncertain 
• is too reliant on judicial discretion 
• makes it harder for people to resolve disputes without conflict 

The proposed reforms do not completely rewrite the rules. Instead, they aim to: 

• clarify what already exists 
• improve accessibility 
• promote fairness and consistency 

As the consultation itself makes clear, the aim is to create a system that is clearer, more consistent, and better aligned with modern family life, while still protecting children and vulnerable individuals. If implemented, the changes could reshape how financial issues are approached on divorce with greater emphasis on clarity, planning, and early resolution. 

Need advice? 

If you are going through a separation or considering your options: 

• the current law still applies 
• proposed changes are not yet in force 
• early legal advice remains crucial 

Understanding your position can help you make informed decisions at an often difficult time. Our family and children law team is here to help. We can talk you through your options and provide clear, practical advice tailored to your circumstances. Get in touch with us to arrange a confidential conversation. 

 

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