Digital Divorce - The highs and lows of blame-free paperless divorce

Divorce applications rose by 20% in the year following the introduction of no-fault divorce (according to figures from the Ministry for Justice.) But while the headline process may be easier, couples going through the legal break-up stage are still experiencing many challenges.

Heralded as a new dawn for parting couples, the Divorce, Dissolution and Separation Act 2020 aimed to streamline the divorce process when introduced in April 2022. The legislation has made divorce less confrontational, allowing couples to end a marriage with a statement of irretrievable breakdown. Previously, one partner had to be blamed for adultery, desertion or unreasonable behaviour, or the couple had to go through a period of separation to qualify for a divorce.  

The new law also makes it possible to file for divorce jointly so that couples can reflect a mutual agreement to part ways.

Notably, the change was welcomed as a significant advance for those looking to leave abusive marriages. Now, victims of domestic abuse can take action knowing the application cannot be contested, nor do they have to make allegations requiring investigation or supporting evidence.  

The reforms marked a significant milestone in family law, with the potential to reduce the emotional strain on couples going through marital breakdowns. However, one year on, the bigger picture is a mixed outcome for those directly impacted by the process.  

How simplification creates complication 

The attraction of what has been promoted as 'digital divorce' via an online portal removes the apportioning blame. It appears as a quick-fix, low-cost solution to what was previously a complex procedure. Indeed, that's the promise offered by an internet search for divorce with one top result quoting: 'Complete and submit the court forms yourself. This will be the cheapest option as you only have to pay the court fees.'

But getting divorced isn't just a legal process to end a marriage. In most circumstances, it will require negotiation and agreement on everything from child arrangements, bank accounts, business and pensions and living arrangements once all things financial have been mediated.  

While the new process undoubtedly makes it much easier to take a DIY route to end a marriage, it may, in turn, create other significant problems. This is because separating couples are finalising the divorce before making all the necessary agreements.

Claims over finances cannot be resolved by personal agreement, even if it appears amicable at the time. Without a court-approved financial order, either party can make a financial claim on the other long after the marriage has ended.  

Lack of advice may also leave one side open to exploitation by the other, either because they do not realise what they may be entitled to in a fair division of assets or they may not even know what assets their former spouse owns. Full disclosure through the process of drawing up an application for a financial order, combined with independent advice and oversight in asking the court to make a decision, can help overcome these issues. 

And a lack of knowledge affects not just those taking the DIY route. Increasing numbers of online operators who may not have the expertise to guide couples along the journey have entered the digital divorce market. The Competition and Markets Authority (CMA) has begun a review of digital legal services, including 'quickie' divorces, because of concerns over unregulated advisers.

The CMA said that while alternative providers can be innovative and sometimes cheaper, it found "misleading claims about both the simplicity of the process and prices" from those offering divorce, leaving consumers "unclear about what they can be helped with or what they are paying for". The CMA highlighted "inadequate quality of service, including firms using the wrong forms, entering incorrect details, sending papers to the court late".

The new divorce deal breaker

In recent years, financial negotiations have focused increasingly on the value of the family home and the challenge of providing a roof for each partner in the face of soaring house prices, particularly when both homes need to be big enough for children to spend time living with each parent. 

Alongside pension sharing, business assets and inheritances, property remains the big issue, but over the last year, an unexpected bargaining chip has been the mortgage deal on the family home. 

Following steep rises in interest rates, the cost of borrowing may lead to inequality between separating spouses if one is holding on to a long-term low-interest rate. Combined with stricter affordability tests from lenders, it may lead to one spouse asking for compensation for the higher cost involved or for a more significant share of the pot to enable an equivalent purchase. Some may negotiate with the lender to split the existing deal between them, but this is up to the lender and their borrowing terms.  

Tax changes give breathing space

Alongside all the challenges, there is at least some good news, with a valuable change in how divorcing couples are taxed. Since April 2023, there has been a new timetable on capital gains tax reliefs when couples break up. 

While together, transfers and disposals between a couple can be on a 'no gain, no loss' basis, and previously, the relief was also allowed during the first tax year of any separation. But once outside that first tax year, matters became complex and could involve tax charges on the spouse or civil partner transferring the asset. 

Now, the new rules give separating couples up to three years after the year they cease to live together to make a no-gain, no-loss transfer, with no time limit when the transfer is part of a divorce agreement covered by a court order.  

With financial matters becoming increasingly complex and delays in the courts, many divorces are taking longer to complete, so this change is essential and valuable for many couples. 

Get in touch for help and support

Whether you and your spouse have decided to divorce due to disagreements or you have simply grown apart, we are here to help guide you through the process to ensure a fair and amicable break-up. For help and guidance on divorce and separation, please get in touch with our family team on 023 8063 9311 or email enquiries@warnergoodman.co.uk.