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Civil partnership rule change: the benefits

Paloma Kubiak
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Paloma Kubiak

Opposite-sex couples will be able to choose civil partnerships over getting married, which could pave the way for better protections and rights for partners in life and death.

Prime Minister Theresa May has announced changes to the law allowing heterosexual couples in England and Wales to enter a civil partnership, extending the rights currently only afforded to same-sex couples.

May said: “As Home Secretary, I was proud to sponsor the legislation that created equal marriage. Now, by extending civil partnerships, we are making sure that all couples, be they same-sex or opposite-sex, are given the same choices in life.”

It follows a Supreme Court judgment earlier this year which ruled banning opposite-sex couples from civil partnerships was incompatible with the European Convention on Human Rights.

The government has launched a consultation into the legal, tax and pension implications of the law change.

Experts say the new law means heterosexuals who do not want to go down the marriage route will have the same safeguards and rights as married couples.

This will be particularly important to the over three million co-habiting couples who currently have very limited rights and protections in the event of a breakdown of the relationship or death.

Civil partnership: the tax and pension benefits

The new rules will mean opposite-sex spouses in a civil partnership will benefit from certain benefits and rights currently only afforded to same-sex civil partnerships and people who are married.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Spouses benefit from a variety of special rules – including the ability to transfer savings or capital gains to the spouse who pays the least tax. There’s also the marriage allowance, which is worth up to £900. Unmarried couples can’t take advantage of any of this.”

While married couples and those in civil partnerships can leave everything to one another free of inheritance tax, unmarried counterparts only have their own £325,000 allowance.

“Everything they pass to one another in excess of this allowance is potentially subject to inheritance tax,” Coles said.

She added that if an unmarried couple splits up, there are no guaranteed rights to each other’s property, instead they have to fight through the courts. If a partner dies without  a will, the surviving partner has no automatic inheritance rights either. But this will no longer be the case if they choose a civil partnership.

Other entitlements unmarried couples miss out on include Bereavement Support Payments and their partner’s state pension contributions when they die.

An own goal for co-habiting couples?

However, Mark Harrop, senior associate in the family team at Collyer Bristow LLP, said that while the move is presented as a victory for equality, it may actually present a huge own goal for those who want better rights for cohabiting couples.

He said: “Civil partnerships are marriages in all but name – there is no reason to think that many people will opt for them who would not otherwise have got married. What are really needed are better rights for those 3.3 million cohabiting couples who have not opted in to either arrangement; sadly this announcement is likely to see such reform kicked further into the long grass.”