Kirk Rice Blog

Tax Implications for Unmarried Cohabiting CouplesWritten on September 27, 2024 by Kirk Rice LLP

Tax is not the only reason to get married or register a civil partnership, but you could get smart. 

If you are in a cohabiting relationship, you may not know everything you ought to about property, finances, taxes and the law. 

Cohabiting couples do not have automatic rights to a partner’s estate after death leaving many people with financial difficulties upon the death of a partner. Did you know unmarried partners do not have legal rights over assets, savings or property like those in civil partnerships or marriage? 

Unmarried individuals, especially those without a Will, are far more likely to contribute inheritance tax to the government after their death for several reasons. The value of all assets, including jointly owned homes are assessed for inheritance tax on death. This tax bill can leave your dependants with a lot less savings or mean they must move out of the family home after your death. 

Without a Will you may be surprised to know that whatever you own is not inherited by the person you enjoy your life with. If you don’t have a Will you are not alone in the UK, but it should be the first step in sorting out your affairs.  

After your death your effects, savings, pensions are divided up. First in-line are any children, if you do not have any children, your parents, then siblings, half-siblings, grand-parents or aunts/uncles and then the Crown. Your surviving life partner gets nothing in the current law by default. They may be able to challenge this in some circumstances, but of course it will take much time and expense to  

If you own a home together with your life partner your share will go straight to your children or other beneficiaries on your death. If your children are under 18 the Office of the Public Guardian will be appointed to look out to their interests. Your lifetime partner may need to pay rent to them. 

Lots of people buy a joint life policy as it seems the easiest way to provide money for each other or pay off a loan or mortgage, but did you know single policies can be more effective if set up in the right way.  

In the absence of getting married or a civil partnership, consider: 

• Make a Will to state who the assets are left to and any rights, (e.g. the surviving unmarried partner being able to live in the property) 
• Review the type of joint ownership you have for your home and consider how your savings would be affected 
• Ensure you have nominated beneficiaries for any workplace benefits and all pensions you have 
• Make sure there is evidence of co-habiting and financial interdependence 
• Review any life and serious illness polices.  

Solicitors and financial advisers will show you what you need to do to improve your financial well-being and avoid the unwelcome impact of not planning can have on the people you leave behind.  Get in touch with us on 01344 875000 or info@kirkrice.co.u

Information is based upon our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. Tax planning is not regulated by the Financial Conduct Authority. 

This is published for information purposes only and does not constitute financial or investment advice and examples are for illustrative purposes only. The guidance and/or information contained within this site is subject to the UK regulatory regime and is therefore only relevant to consumers based in the UK. Any comments and data should not be taken to specify any products or actions and should not be construed as a solicitation or offer, or recommendation to acquire or dispose of any product or investment in any jurisdiction. While all reasonable efforts are made to obtain information from sources which are accurate at the date of production no representation is made or warranty provided that the information or any opinions contained in this document are accurate, reliable or complete. The information and any opinions expressed are based on current conditions, certain assumptions and are subject to change without notice. Any user must, in any event, conduct their own independent due diligence and investigations, together with their professional advisers, into legal, regulatory, tax, credit and accounting matters before making decisions rather than relying on any of the information given. We will make every effort to correct errors brought to our attention. 

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