Solicitor, Stuart Price from our Private Client team speaks to Professional Adviser about IHT considerations for unmarried couples and the practical steps they can take.
The number of cohabiting unmarried couples in the UK is on the rise. The Office for National Statistics has confirmed there were around 3.3m cohabiting couples recorded in 2016. Whether young relationships or later life partnerships, many have no intention of getting married yet are unaware they do not enjoy the same legal rights and tax benefits as married couples.
Inheritance tax (IHT) is payable at 40% on death on assets in excess of the nil-rate band (currently £325,000). The full spouse exemption was introduced on 13 November 1974, which allowed married couples to leave their entire estate to their surviving spouse free of IHT.
Civil partnerships were introduced in 2004 and have the same effect for IHT purposes as marriage, allowing same sex couples to enjoy similar IHT benefits. Cohabiting couples are, however, the forgotten relationship and suffer disadvantages as a result of their decision not to marry.
If cohabiting couples wish to make provision for each other under their wills - even if only to the extent of enabling the survivor to remain in a property (which they might co-own) until the second death - there is no spouse exemption.
The full article is available online, first published by Professional Adviser on Tuesday 27 June 2017: Stuart Price: IHT considerations for unmarried couples