Understanding the financial benefits of civil partnerships

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The decision to change the law so that same sex couples can register their relationship and receive similar benefits to married couples followed years of campaigning by gay rights groups. There are a number of financial benefits – namely that you can leave money and property to your civil partner without incurring inheritance tax. Pensions and other benefits can also be passed to civil partners. But what exactly are the rights that go with a civil partnership?

Differences between civil partnership and marriage

Although it’s called civil partnership, in financial terms, it is essentially a same sex marriage. However, there are some differences:

SAVVY TIP: Many local council websites have lots of information about civil partnership registration. The Citizens Advice website has a section on registering a civil partnership.

1. There is no requirement to consummate a civil partnership.

2. Adultery is not a ground for dissolutionwhich is the civil partnership equivalent of divorce. However, if your civil partner was to have a relationship or affair with someone else, that could be ‘unreasonable behaviour’ which is a ground for dissolution.

3. Some of the terminology is different e.g. a petition (for divorce) is an application for dissolution of the civil partnership.

Converting your civil partnership into marriage

Since December 2014, if you registered your civil partnership in England, Wales or Scotland, you’ve been able to convert it into marriage (although the rules for doing this vary between England and Wales, and Scotland). You can’t convert a civil partnership into a marriage in Northern Ireland.

SAVVY TIP: The Gov.uk website says that it may be possible to convert a civil partnership into a marriage abroad, and it has a list of the countries that you can do this in. You can read more about converting your civil partnership to marriage on the Gov.uk website.

How civil partnerships and marriage are the same

In most other respects civil partnership is the same as marriage. In particular:

1. Civil partners get the same inheritance tax break as married couples. This means that you and your civil partner can leave money and property to each other when you die without worrying about an inheritance tax bill.

2. You will each automatically inherit from each other if there is no will. The amount you can inherit will depend on whether or not you have any children. The intestacy rules (the rules which decide who gets what if there’s no will) are different for England and Wales and Scotland.

3. You can give away assets to each other free of capital gains tax.

4. You’ll be able to inherit your civil partner’s pension. Either a company or private scheme when she dies, and vice versa.

5. Civil partners can get parental responsibility for each other’s children in the same way as married couples

6. The process of dissolution is essentially the same as divorce. The main differences are that adultery can’t be used as a ground for dissolution of a civil partnership and some of the terminology is different.

7. Financial settlements on dissolution of a civil partnership are the same as for couples who divorce.

SAVVY TIP: If you lived with your partner before civil partnership, the time you lived together is likely to be treated as counting towards the length of the civil partnership if you were to break up (through dissolution). This may affect that financial settlement, which would be less if you had a short civil partnership and hadn’t lived together previously.

8. Pre and post registration agreements are treated in the same way as pre and post nuptial agreements.

International civil partnership

Although civil partnerships are treated the same as marriage for most purposes in the UK, many countries don’t recognise a formal relationship between the civil partners at all. Countries that have similar schemes for same sex couples and even those that allow same sex marriage may not recognise a civil partnership registered in the UK.

SAVVY TIP: If you’re in a civil partnership and you’re planning to live in another country, even for a short period, your civil partnership may not be recognised there. You should look into how this might affect you in terms of tax and in terms of any visa requirements.

Related articles:

Buying a house with your partner

Does your partner’s bad credit rating affect yours?

Transferring unused inheritance tax allowance – what’s involved

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