The Civil Partnerships, Marriages and Deaths (Registration etc.) Act 2019 received Royal Assent on 26 March 2019 and came into force from 31 December 2019. Among other changes, this Act allows a heterosexual couple the right to choose to have a civil partnership instead of a marriage. Couples living together who have been waiting for this to be an option can now go ahead.
This change is further to a Supreme Court judgement given on 27 June 2018 in the case of R (on the application of Steinfeld and Keidan) (Appellants) v Secretary of State for International Development (in substitution for the Home Secretary and the Education Secretary) (Respondent) in which it was held that the Civil Partnership Act 2004 was incompatible with the European Convention on Human Rights because it only applied to same-sex couples.
Of course, just ‘living together’ has few consequences for tax purposes, the main exception being the notorious high income child benefit charge. However, as a heterosexual couple may now opt for the legal tie of a civil partnership, they must appreciate that if they do so, their tax status will be the same as a same sex civil partnership or a married couple. This carries benefits, but it also has some disadvantages. For example, in a marriage or civil partnership there will be no inheritance tax on the death of the first who leaves all their wealth to the surviving spouse or civil partner; gifts from one to another will be free of capital gains tax; or they may claim the marriage allowance which allows a person to transfer £1,250 of their Personal Allowance to their husband, wife or civil partner if they earn more. But there are some disadvantages too, particularly where each of the couple owns their own separate property. For example, only one main residence can be covered by the capital gains tax (CGT) exemption. So it the couple owned two properties and decide to sell one, there is a potential CGT liability. If they decide to sell one, they had better do so quickly. From 6 April 2020, the period of overlap allowed while a second property is being sold will be reduced from 18 to 9 months.