A man has reduced his periodical payments to his ex-wife after he argued that his business income was not a matrimonial asset.

The couple married in 1988 and had four children who are all now adults. The family had a good standard of living thanks to the husband’s successful business.

After they divorced it was ordered that the couple’s total assets, which included the net value of the business, would be split so that each would receive a capital distribution worth around £3m.

The husband would also be required to pay the wife £150,000 per year from the proceeds of the business.

The husband argued that the business was his and not a product of the marriage. Therefore, it was wrong for the £1m income to continue to be shared following the divorce.

The case went to the High Court, which ruled in favour of the husband. It held that an earning capacity was not matrimonial property: it resulted in the generation of property after the marriage. Accordingly, the income generated by the husband’s business should not have been taken into account when considering what order to make.

The reasonable needs of the wife needed to be considered, but the original judge had ordered the figure of £150,000 without reference to any arithmetic.

The court considered how far the capital received by the wife would go towards meeting her reasonable needs.

After purchasing a house, the wife could expect to have in income of around £52,000. Evidence suggested a budget of £120,000 would be reasonable to meet her needs.

The husband would therefore be required to make periodical payments of £68,000 per year.

Please contact us for more information about the issues raised in this article or any aspect of family law.