Pensions - Articles - New civil partnership proposals give family finances a boost

Proposals launched by the Government could lead to a big financial boost for more than three million couples according to mutual insurer, Royal London.

 Under the plans, unmarried opposite sex couples will be able to register for a civil partnership in the same way as same sex couples.

 This could have far reaching implications for their entitlements under the tax, benefits and pension system, as civil partners are generally treated in the same way as married couples, and married couples often benefit from additional rights.

 The Government has said that it intends to legislate by the end of the year to make the necessary changes, and, once the legislation is implemented, more than three million cohabiting couples will have the option of registering a civil partnership for the first time. Financial benefits to them of doing so could include:

 Access to the ‘marriage allowance’, a tax break worth £250 per year to couples where one partner pays tax at the basic rate and the other has unused tax allowances which they can transfer to the higher earner;

 Access to bereavement benefits for working age couples – currently, the National Insurance benefit system recognises only marriage and civil partnership but not cohabitation; this means that cohabiting couples can miss out on state help if one of them dies under pension age;

 Access to inheritance tax breaks for married couples, including the ability to pass on money to a partner free of inheritance tax.

 Potential to inherit pension benefits in occupational pension schemes where provision for cohabiting couples has not yet been equalised;

 Commenting, 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”

 Government Proposals New Civil Partnerships

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