Civil Partnerships - opening the door to fairer finances
- AuthorPaul Chilver
As Pride Month 2020 draws to a close, now is a good time to reflect on a huge change to legislation which occurred last year.
Following a lengthy legal campaign, Rebecca Steinfeld and Charles Keidan won their appeal to the Supreme Court in respect of Civil Partnerships for opposite-sex couples.
The Supreme Court found that UK legislation regarding Civil Partnerships was in need of urgent change and in December 2019 Civil Partnerships were made available to both same-sex and opposite-sex couples living in England and Wales.
Long term couples who are living together do not qualify for the same benefits available through Marriage and Civil Partnership and many people no longer wish to follow the traditional process of marriage. With this in mind, a Civil Partnership may provide an alternative option for consideration.
The following benefits apply to both Married Partners and Civil Partners:-
- Married Partners and Civil Partners can transfer assets between each other without realising Capital Gains. Providing the couple live together, any transfer will be covered by the Spouse Exemption, whereas cohabitants do not have this advantage. The ability to transfer assets freely can result in large savings on Capital Gains Tax.
- Under current legislation, no Inheritance Tax is payable when an estate is left to a surviving Spouse or Civil Partner as this can be covered by the Spousal Exemption. In contrast, if the surviving Partner is not Married or in a Civil Partnership with the deceased, there could be a potential Inheritance Tax liability of up to 40% on the estate.
- If you die without a will your estate will be distributed according to the Rules of Intestacy. A particularly important point to note is that non-married Partners and non-Civil Partners do not have the right to inherit under these rules. Therefore, longstanding couples who simply cohabit with each other will have no claim to the estate under the intestacy provisions.
- · Another option available to Married Partners/Civil Partners is the ability to transfer 10% of their unused Personal Allowance to their Partner. This can secure an Income Tax saving for the receiving partner if they are a high earner. The ability to transfer 10% of the Personal Allowance is not available to Non-Married Partners and Non-Civil Partners.
The introduction of Civil Partnerships has played an integral part in the battle for securing equality to the LGBTQ+ community. According to the latest figures published by the Office for National Statistics, there were 956 Civil Partnerships formed in England and Wales in 2018, an increase of 5.3% compared with 2017. With Civil Partnerships now extended to opposite-sex couples it is highly likely that these numbers will continue to increase.
If you have any questions relating to the contents of this blog or wish to discuss your financial arrangements in general, please do not hesitate to contact me.
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