Opposite-sex couples set to gain civil partnership financial advantage
Millions of unmarried couples could gains a civil partnership financial advantage following new government proposals.
The proposals are designed to extend civil partnerships to opposite-sex couples, resulting in these individuals becoming entitled to a range of financial wins.
It follows an announcement made by the government last year to introduce opposite-sex civil partners. The plans for extending these civil partnerships to opposite-sex couples should be introduced by the end of 2019, under new government proposals.
At the same time, the government has launched a consultation for couples in England Wales to ensure they can access the form of legal union that is best suited to them.
This consultation will ask the public for their opinions on given opposite-sex couples the right to convert their existing marriage into a civil partnership, for a defined time.
Minister for Women and Equalities, Penny Mordaunt, said:
“There are all sorts of reasons why people may choose not to marry, but for a long time it has been the only option for many wanting the legal security it provides.
“Last year the Prime Minister announced government would support the extension of civil partnerships to opposite-sex couples. This is a fantastic step, providing an alternative to marriage for these couples.
“We must now consider those who didn’t haven’t had this as an option previously, that’s why we’re consulting on whether opposite-sex married couples can convert their marriages to civil partnerships.”
The consultation will run until 20th August, informing how the government legislates around the proposals.
From December 2019 onwards, the civil partnerships that have been available to same-sex couples since 2005 will be extended to opposite-sex couples.
The opportunity for opposite-sex couples entering into a civil partnership will offer access to a range of financial advantages, including tax, state benefits and pensions.
It could lead to a civil partnership financial advantage for millions for opposite-sex couples.
It will mean opposite-sex couples who form a civil partnership will be able to access the marriage allowance. This tax break is worth around £250 a year to couples, where one partner is a basic rate income taxpayer, and the other can allocate their unused personal allowance to the higher earner.
Opposite-sex civil partners will also get access to bereavement benefits for working-age couples. This state benefit, funded from National Insurance contributions, is currently only available to married couples and civil partners.
Another financial advantage for opposite-sex civil partners will be the ability to transfer any unused inheritance tax nil-rate band on death, to the surviving partner, as well as passing on assets free of inheritance tax.
Finally, opposite-sex civil partners will have the option to inherit pension benefits from an occupational pension scheme, where provision for cohabiting couples has not yet been equalised.
Steve Webb, Director of Policy at Royal London, said:
“It is very good news that the government has responded to the recent court judgment by pressing ahead with legislation to allow all couples to register a civil partnership.
“Couples who live together have been second class citizens for far too long when it comes to their treatment by the tax and benefit system.
“Registering for a civil partnership will bring access to a range of help from the tax and benefit system, and millions of couples will want to think if this is the right thing for them to do.”
The proposals are excellent news for unmarried, opposite-sex couples who could benefit financially from entering into a civil partnership.
Of course, forming a civil partnership is not a decision to make lightly, and has significant legal and financial implications, so the economic benefits described in this article alone should not prompt any hasty decisions!