Civil partnership change will drive inheritance tax benefits
The recent announcement by Prime Minister Theresa May that heterosexual couples will be able to choose between marriage and a civil partnership is welcome news to many.
It followed a Supreme Court ruling earlier this year that deemed existing legislation discriminatory as same-sex couples can enter civil partnerships or get married, while opposite-sex couples can only do the latter.
The principle of equality drove the changes, but for the 3.3m unmarried, cohabiting couples in the UK, it will have many, far-reaching practical ramifications – not least in terms of inheritance tax.
Cohabiting couples who do not want the commitment of marriage have previously suffered as they cannot access the same benefits.
Married couples and civil partners do not have to pay inheritance tax on money or property left to them by their spouse. And, if the personal allowances – which in many cases can be almost £500,000 per person – are not used, they can be transferred to their surviving spouse or civil partner upon death.
Unmarried, cohabiting couples do not receive these benefits and can be left with crippling inheritance tax bills.
It is not clear when the amendments to the legislation will be passed, but when they are, cohabiting couples will be able to get the same benefits by entering a civil partnership.
Crucially, marriage will no longer remain a necessity in giving the protection and security essential for couples.
