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Unmarried Couples: What You Should Know About Tax Breaks and Inheritance Rights

If you and your partner are living together but aren’t married, you might be wondering about the financial perks and protections you’re missing out on. Over time, many have asked: Should cohabiting couples have the same rights as married couples, especially when it comes to taxes and inheritance?

Back in 2007, the Law Commission suggested that couples who have lived together for five years (or two years with children) should have similar inheritance rights if one of them passes away without a will. However, this recommendation wasn’t adopted, so some key advantages are still reserved for those who are married or in a civil partnership. So, what are some of the main benefits unmarried couples are missing?

  • They can’t inherit an unused nil rate band from their partner.
  • They can’t give each other Inheritance Tax-free gifts during their lifetime or on death.
  • They can’t inherit the ISA allowance.
  • They don’t qualify for the married couple’s allowance, which only applies if one person was born before 6 April 1935.
  • They miss out on “no gain no loss” Capital Gains Tax rules on transfers between partners.
  • They can’t share part of their personal allowance (though this only applies to lower-income married couples).

What About Inheritance Rights?

When it comes to inheriting from each other, unmarried partners (and those not in a civil partnership) don’t have automatic rights unless there’s a valid will in place. Since more than half of UK adults don’t have a will, this means many people could leave behind a partner who has no legal right to inherit their estate.

If you’re not ready to tie the knot, the best way to make sure your wishes are respected—and your partner and loved ones are taken care of—is by making a will. That way, you can be sure that your belongings (including the family cat!) will go to the right person. A signed and witnessed will is the simplest way to offer peace of mind and protection for the future.

Looking for more information? 

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