Divorce often brings financial tensions into sharp focus, particularly where one spouse believes the other is not earning as much as they reasonably could. Questions frequently arise during the divorce process about whether a spouse’s claim of a low income is genuine or whether they are making a strategic admission to lessen their financial burden. So what should the court base its financial decisions on — what a person actually earns or what they could earn? This is where the concept of imputed income becomes relevant.
In family law, the court’s role is not to punish either party, but to reach a fair outcome based on needs, resources, and conduct where relevant. When one party appears to be under-earning, either deliberately or without good reason, the court may consider attributing an income to them that differs from their current or stated earnings. This can have a significant impact on spousal maintenance, child maintenance (in limited circumstances), and overall financial settlements.
What is imputed income?
Imputed income refers to income that a court attributes to a spouse, even though they are not currently earning that amount. Rather than relying solely on payslips or tax returns, the court assesses what that person could reasonably earn based on their skills, experience, work history, and the wider employment market.
This does not mean the court assumes everyone should be working flat out or earning at their maximum potential. Instead, imputed income is considered where there is evidence that an individual has chosen to reduce their earnings, avoid work, or fail to make reasonable efforts to become financially independent.
Importantly, the court does not lightly disregard actual income. The starting point is always the reality of each party’s financial position. Imputation is the exception, not the rule.
Why might a court consider imputed income?
The family courts are guided by fairness and the statutory factors set out in section 25 of the Matrimonial Causes Act 1973. One of those factors is each party’s income, earning capacity, property, and other financial resources, including resources they are likely to have in the foreseeable future.
If a spouse’s earning capacity is significantly higher than their current income, the court may ask why. Common situations where imputed income is raised include:
- A spouse who has resigned from a well-paid role shortly before or during divorce proceedings
- A party who has reduced their working hours without clear justification
- Someone who has chosen not to return to work despite having the ability and opportunity to do so
- A self-employed spouse whose declared income appears inconsistent with their lifestyle
The court’s concern is not whether someone has made a personal lifestyle choice, but whether it is fair for the financial consequences of that choice to be borne by the other spouse.
Deliberate underemployment vs genuine reduced earnings
A key distinction the court must make is between deliberate underemployment and genuine reasons for reduced income.
Deliberate underemployment usually involves a conscious decision to earn less than one reasonably could, particularly where the effect is to increase reliance on the other party. Examples might include:
- Leaving employment without securing alternative work
- Choosing low-paid work when higher-paid roles are realistically available
- Failing to seek employment despite having recent and relevant experience
By contrast, there are many legitimate reasons a person’s income may reduce, and the court is careful not to unfairly penalise these. Genuine reasons may include:
- Caring responsibilities for young children or vulnerable dependants
- Long-term illness or disability
- Mental health difficulties supported by medical evidence
- Redundancy followed by unsuccessful efforts to secure similar work
- Age or a long absence from the workforce making re-employment difficult
The court will examine not only what has happened but why. Motivation, timing, and effort all matter.
How the court assesses earning capacity
When considering whether to impute income, the court looks at a range of factors, including:
- The spouse’s qualifications, skills, and work history
- Their age and health
- The length of time they have been out of work
- The availability of suitable employment in the local or national job market
- Whether retraining would be required and how long that would take
Evidence is critical because judges will not speculate or guess. They rely on documents, witness statements, and, in some cases, expert evidence such as employment or vocational assessments to understand the position.
The court may also consider whether it is reasonable to expect a spouse to increase their income gradually, rather than immediately. In longer marriages, particularly where one party has been out of the workforce for many years, the court often allows a period of adjustment.
However, imputation can also create risk. If the court imputes an income that is unrealistic, the paying spouse may later face enforcement issues, arrears, or further litigation. Judges are therefore cautious and aim to set figures that are achievable, not aspirational.
Is imputed income used for child maintenance?
Child maintenance is usually dealt with through the Child Maintenance Service (CMS), which relies primarily on actual taxable income as reported to HMRC. As a general rule, CMS does not impute income in the same way the family court does.
That said, there are limited circumstances where income may be adjusted, such as where a parent is diverting income, receiving unearned income, or intentionally reducing earnings to avoid child maintenance. These cases can be complex and often require detailed evidence.
Where child maintenance is dealt with within the court (for example, top-up orders or school fees), the court may take a broader view of earning capacity, including imputed income, as part of the overall assessment.
Proving intentional under-earning
Allegations of intentional under-earning are serious and should be supported by evidence. Common forms include:
- Employment records showing previous earnings
- Job advertisements demonstrating available roles
- Evidence of qualifications and professional registration
- Bank statements indicating lifestyle inconsistent with declared income
- Social media or business activity suggesting undeclared work
Credibility plays a major role. Judges often form a view based on whether a party appears open, reasonable, and realistic about their financial position.
The court recognises that life circumstances change, careers fluctuate, and not everyone can or should work at full capacity indefinitely. At the same time, it will not allow one party to unfairly shift the financial burden onto the other through avoidable under-employment.
As with all family cases, each turns on its own facts. The question is never simply whether a spouse earns less than they once did, but whether, in all the circumstances, they are doing what can reasonably be expected of them. Where they are not, the court has the discretion to look beyond the payslip and consider the income that ought to be attributed.