The background to Standish v Standish [2025] UKSC 26 (see also page 8) is as follows. In 2017, Mr Standish transferred assets worth approximately £80m into Mrs Standish’s sole name. He was motivated by concerns about the IHT that might arise on his death, estimated to be around £32m. Mrs Standish was non-domiciled, with Australia as her domicile of origin. The intention was that she would subsequently settle the assets into discretionary trusts in Jersey for the benefit of their children. However, this plan was never carried out, and the couple later divorced.
When divorce proceedings commenced, a central issue was whether the assets in question were matrimonialised or not. Mrs Standish argued before the Supreme Court that the 2017 transfer had matrimonialised the assets, thereby making them subject to the sharing principle. The Supreme Court rejected this and upheld the Court of Appeal’s decision.
Commenting on the matrimonialisation of assets and the tax intentions, the Supreme Court stated (at [56] and [61]):
‘In relation to a scheme designed to save tax, under which one spouse transfers an asset to the other spouse, the parties’ dealings with the asset, irrespective of the time period involved, do not normally show that the asset is being treated as shared between them. Rather the intention is simply to save tax. Tax planning schemes to save income tax, involving transfers of assets from one spouse to another, are commonplace, given that there is no capital transfer tax on transfers between spouses. However, transfers of capital assets with the intention of saving tax, do not, without some further compelling evidence, establish that the parties are treating the capital asset as shared between them ...
‘But 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. Rather the transfer was in pursuance of a scheme to negate inheritance tax and it was for the benefit exclusively of the children. The parties’ intention was that the £80 million should not be retained by the wife but should be used by her to set up trusts for the children, thereby negating inheritance tax. In short, there was no matrimonialisation of the 2017 Assets because, first, the transfer was to save tax and, secondly, it was for the benefit of the children not the wife. The 2017 Assets were not, therefore, being treated by the husband and wife for any period of time as an asset that was shared between them’ (emphasis added).
Matrimonialised or not: The Supreme Court confirmed that the question of whether an asset has been matrimonialised must be determined by reference to how the parties treated the asset in practice, and whether there is evidence that it was regarded as shared. A transfer between spouses alone does not suffice. Where the sole intention is tax mitigation, as in this case, the asset will not necessarily acquire a matrimonial character.
Family law v tax law: Whilst the ruling clarifies important aspects of family law, it also serves as a reminder of the potential collision between tax and matrimonial principles. Structuring transactions with a view to tax efficiency does not shield them from being scrutinised through the lens of fairness in divorce. Tax motivated actions may still fall short if the surrounding evidence does not support the claim that assets were intended to be shared.
The background to Standish v Standish [2025] UKSC 26 (see also page 8) is as follows. In 2017, Mr Standish transferred assets worth approximately £80m into Mrs Standish’s sole name. He was motivated by concerns about the IHT that might arise on his death, estimated to be around £32m. Mrs Standish was non-domiciled, with Australia as her domicile of origin. The intention was that she would subsequently settle the assets into discretionary trusts in Jersey for the benefit of their children. However, this plan was never carried out, and the couple later divorced.
When divorce proceedings commenced, a central issue was whether the assets in question were matrimonialised or not. Mrs Standish argued before the Supreme Court that the 2017 transfer had matrimonialised the assets, thereby making them subject to the sharing principle. The Supreme Court rejected this and upheld the Court of Appeal’s decision.
Commenting on the matrimonialisation of assets and the tax intentions, the Supreme Court stated (at [56] and [61]):
‘In relation to a scheme designed to save tax, under which one spouse transfers an asset to the other spouse, the parties’ dealings with the asset, irrespective of the time period involved, do not normally show that the asset is being treated as shared between them. Rather the intention is simply to save tax. Tax planning schemes to save income tax, involving transfers of assets from one spouse to another, are commonplace, given that there is no capital transfer tax on transfers between spouses. However, transfers of capital assets with the intention of saving tax, do not, without some further compelling evidence, establish that the parties are treating the capital asset as shared between them ...
‘But 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. Rather the transfer was in pursuance of a scheme to negate inheritance tax and it was for the benefit exclusively of the children. The parties’ intention was that the £80 million should not be retained by the wife but should be used by her to set up trusts for the children, thereby negating inheritance tax. In short, there was no matrimonialisation of the 2017 Assets because, first, the transfer was to save tax and, secondly, it was for the benefit of the children not the wife. The 2017 Assets were not, therefore, being treated by the husband and wife for any period of time as an asset that was shared between them’ (emphasis added).
Matrimonialised or not: The Supreme Court confirmed that the question of whether an asset has been matrimonialised must be determined by reference to how the parties treated the asset in practice, and whether there is evidence that it was regarded as shared. A transfer between spouses alone does not suffice. Where the sole intention is tax mitigation, as in this case, the asset will not necessarily acquire a matrimonial character.
Family law v tax law: Whilst the ruling clarifies important aspects of family law, it also serves as a reminder of the potential collision between tax and matrimonial principles. Structuring transactions with a view to tax efficiency does not shield them from being scrutinised through the lens of fairness in divorce. Tax motivated actions may still fall short if the surrounding evidence does not support the claim that assets were intended to be shared.
.tmb-editorspic.jpg?sfvrsn=c9a7a0cc_1)
