Unwed partners urged to seek advice on their money matters

Are unmarried couples losing out? Stephen Rankine, financial adviser with NFU Mutual, says they should seek guidance

There has been a huge rise in the number of couples choosing to live together before, or instead of, getting married.

The Office for National Statistics says there are about 3.4 million cohabiting couples in the UK, making it the fastest growing family type over the past 10 years.

But cohabiting couples don’t enjoy the same tax and legal advantages as those who are married or in a civil partnership, so it is important they take financial advice.

Here are some of the key issues to consider. Making a will:

Dying without a will means the law will decide what happens to your assets.

This is particularly important for unmarried couples as the surviving partner doesn’t have an automatic right to a share of the estate and will need to apply to the court.

Property:

There are different ways to own a property together. If you own as “joint owners with a survivorship clause”, this means that, if one of you dies, the other automatically inherits their share.

But if you own as “joint owners” the deceased’s share won’t automatically pass to you, unless you’ve specifically provided for this in the will. Inheritance tax: Married couples and civil partners can normally pass on assets to each other free of inheritnce tax.

They can also pass on any unused tax-free allowance to the survivor.

Cohabiting couples don’t enjoy the same benefit, meaning they could face an unexpected tax bill on the death of their partner. Other taxes: Cohabiting couples miss out on a number of tax breaks available to married couples and those in civil partnerships.

These include the ability to transfer the ownership of property, shares and some other investments between them without triggering capital gains tax (CGT), which can help reduce CGT when selling or giving away assets.

The marriage allowance allows those paying the starter, basic or intermediate rate who are married or in a civil partnership with a nontaxpayer to claim part of their unused tax-free income tax allowance.

This is worth up to £250 in the current tax year. It was first introduced in April 2015 and claims can be backdated.

If you were eligible to claim the allowance in each of these years, you could be owed up to £1,150.

Pensions:

The death benefits payable from pensions can be significant.

It is important to keep the trustees of your pension scheme up to date on who you would like to receive the benefits, as they may not automatically be transferred over to your partner.

“Cohabiting couples miss out on a number of tax breaks”

WITHOUT A HITCH: Cohabiting couples should pay close attention to their financial arrangements