A Private Members Bill designed to broaden the definition of a civil partnership to include cohabiting people has been amended following a recent Supreme Court ruling.
The bill seeks to change the law so that two heterosexual people could enter into a civil partnership in order to secure vital rights, such as those relating to inheritance, tax and pensions.
In June the Supreme Court ruled that a heterosexual couple was entitled to enter into a civil partnership.
A change in the law would have implications for the financial sector if the report called for in the amended bill delivers.
The potential benefits to affected people include passing their estate to one another tax free on death and transferring any unused part of their inheritance tax nil rate band, which is currently worth £325,000, to one another on death.
The amendment calls for a report to be prepared to assess "how the law ought to be changed to bring about equality between same-sex couples and other couples in terms of their future ability or otherwise to form civil partnerships."
Gordon Andrews, tax and financial planning expert at Quilter PLC, welcomed the latest steps to strengthen the financial rights of Britain’s 3.3 million cohabiting couples.
He said: "Part of the problem is there are huge benefits to married couples and civil partners, which are not extended to other pairs such as cohabitees or siblings.
"There have been a number of high profile cases of siblings living together in later life for many years fighting to be afforded similar rights as spouses on death.
"In the future they may claim they are being discriminated against if they are not able to have the same or similar rights to Inheritance tax exemptions or succession rights as married couples or civil partners."
Helen Morrissey, personal finance specialist at Royal London, said: "The court ruling and the latest work on the Private Members Bill are positive steps to dragging this particular issue into the 21st Century.
"People who live together for a long time tend to think they have rights under common law, when in fact they don’t, and this can prove a very bitter pill to swallow if they split up or one dies."
Royal London previously called for cohabiting couples to receive the same tax treatment as those who are married or in civil partnerships in its response to a government review of inheritance tax in June.
But it warned there would need to be safeguards in place to prevent fraud.
Couples would need to present evidence that they had lived together for a certain amount of time - for instance three years – before qualifying for the benefit, the insurer said at the time.
dan.moore@ft.com
