Pensions 

Couples to get financial perks from civil partnerships

Couples to get financial perks from civil partnerships

The government is to introduce rules which will allow unmarried couples of the opposite sex to register for a civil partnership and could offer substantial financial perks.

The government equalities office launched a consultation today (July 10) on this issue, intending to legislate by the end of the year to make the necessary changes.

Once the legislation is implemented, more than 3m cohabiting couples will have the option of registering a civil partnership for the first time.

According to Royal London, this change could have far reaching implications for the couples' entitlements under the tax, benefits and pension system.

Civil partnerships, like marriages, offer legal and financial protection for both parties in the event of the relationship ending and benefits including inheritance, tax, pensions and next-of-kin arrangements.

However, according to UK law, only two people of the same sex may enter into a civil partnership. New rules introduced in 2013 made marriage of same-sex couples lawful, without repealing the previous legislation.

Prime minister Theresa May announced in October that the government would change the law to allow opposite sex couples in England and Wales to enter into a civil partnership.

This followed a ruling from the Supreme Court in June which ruled a heterosexual couple could enter a civil partnership.

According to Steve Webb, director of policy at Royal London and former pensions minister, it’s good news that the government has responded to the recent court judgment by pressing ahead with the relevant legislation.

He said: "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."

Rachael Griffin, tax and financial planning expert at Quilter, noted that the days when the overwhelming majority of families were a husband, wife and children was a thing of the past.

She said: "Figures from the Office for National Statistics show that marriage rates remain at historical lows – in 1941 there were 471,000 marriages in the year compared to 243,000 in 2016 – a drop of nearly 50 per cent.

"However, while society has shifted dramatically, tax rules and benefits have not gone with it, indicating that unmarried couples and their children don’t deserve the same kind of support as those that are married."

Ms Griffin added that policymakers need to ensure their taxes and policies are fit for the modern day as even relatively new taxes are steeped in history.

She added: "For instance, the residence nil rate band is only transferable to a spouse or civil partner and the same is true of the transferable nil rate band.

"The system clearly needs a rethink and a different way of determining when the taxes and benefits apply."