Partner Michael Gregory discusses the outcomes of recent family law reforms in eprivateclient

Partner Michael Gregory evaluates the latest reforms to family law following the one year anniversary of no-fault divorces being introduced, and argues that blame still persists despite these changes.

Michael’s article was published in eprivateclient, 12 May, and can be found here.

Last month marked one year since ‘no-fault’ divorce legislation was introduced in England and Wales. Celebrated as a pioneering law which would usher in a new era for separating couples, The Divorce, Dissolution and Separation Act 2020 removed the need for parties to assign blame for a marriage breakdown.

Instead, partners who agree that their marriage has irretrievably broken down would be able to divorce on amicable terms through a joint application, without one of them necessarily being at fault. By adopting a no-fault divorce, parties also remove the possibility of one spouse not responding to a sole application.

Yet the anticipated surge of interest from couples who delayed ending their marriage under the previous regime has not materialised. In fact, the evidence of the last 12 months suggests that more sole applications are still being made than joint applications.

Even though the law now permits couples to divorce without apportioning blame, the majority still consider their spouse to be at fault when they commence proceedings. While those who campaigned for no-fault divorce argued it would open the floodgates for couples seeking to dissolve their marriage without rancour, it seems the opposite is in fact true.

There has been an enormous increase in the frequency of sole applications over the last year. While there is now the option of submitting a joint application, the high proportion of individuals coming forward shows most couples are not divorcing amicably. There is still an underlying need for one party to levy blame against the other.

The no-fault route is of course advantageous for couples who have simply lost interest in each other, who can now divorce without a bitter dispute. In such cases, drawn-out court proceedings are not only costly for both parties but also damaging to family members.

Yet divorces happen for a reason, with unreasonable behaviour being cited most frequently as the grounds for divorce prior to the change in the law.

Unreasonable behaviour was given as the grounds for divorce in more than 34 percent of all petitions in 2021, rising to more than 48 percent among female petitioners in opposite-sex divorces.

In other cases, out of a total of 113,505 divorces granted that year, a two-year separation with consent was the most common ground for petitioners, followed by five-year separation and then adultery.

According to the Office for National Statistics, one in five couples married in 2011 were divorced by their 10th anniversary, so the no-fault legislation was never likely to influence those people who have decided to divorce their spouse. Put simply: if couples do not have an insurmountable grievance, they usually stay together.

Another consequence of the new landscape is that cost orders are not being made for parties commencing divorce applications. This is especially true in cases where a spouse considers that they are not at fault for the marriage ending.

For many, the majority of whom are high net worth and high profile, the introduction of ‘no-fault’ has created new obstacles rather than simplifying the divorce process. Courts will not make an order for costs within the divorce proceedings unless the other party has been uncooperative with the sole application.

As well as the ‘no-fault’ divorce option, another radical change affecting proceedings came into force following the recent Budget. Proposals introduced by the government in July last year relaxed the capital gains tax rules when married couples or those in a civil partnership separate. This has undoubtedly been beneficial for those divorcing parties who are prepared to be patient.

Following the policy shift, separating couples have up to three years after the year of separation to transfer assets between them without incurring capital gains tax. Where assets are transferred as part of a formal divorce agreement, there is no time limit applied to a ‘no gain no loss’ treatment of asset transfers.

The measure will help couples going through divorce to maintain amicable and positive discussions about how to divide up their estate more fairly, without the background worry of a looming tax bill. Previously, transfers had to be concluded by the end of the tax year in which separation occurred to stay capital gains tax-free.

A separate proposed change which has been recently rejected by the government was a recommendation to reform cohabitation law. The Women and Equalities Committee in the House of Commons called for the reforms to better protect cohabiting couples and their children from financial hardship in the event of separation.

Yet despite strong lobbying for these reforms, ministers have chosen to prioritise divorce and civil partnership. The clear inference is that the rules surrounding divorce applications are more pressing than changing the options for separating cohabitants.

Indeed, the government has stated that divorce law changes must be fully integrated before any overhaul of the law protecting cohabitating partners can begin.

Although they represent the fastest growing type of partners in the UK, with over 3.6 million partners cohabiting without formalising their relationship in law, there are no imminent plans to extend the inheritance tax treatment beyond spouses and civil partners.