Taxes and pensions

Inheritance Tax planning

Registered partners will be able to pass assets on to their surviving civil partner without paying inheritance tax. If you don’t officially register your partnership and your partner dies, you will not be seen as the next of kin.

If your partner dies, the estate can be passed on to you without paying any Inheritance Tax Charge.

It is important however to get the right advice as this can be complicated. A good tax advisor could save you thousands in this area, making sure that most of your assets go to those you leave behind and not the taxman.

Capital Gains Tax

This is the tax payable when people give away or sell an asset, the value of which has increased. Married people may give assets to each other without having to pay capital gains tax and registered partners now have the same right. However, a Civil Partnership can only have one main residence exempt from capital gains tax. If you own more than one residence, it is best to consult a financial planner and if necessary, sell one of the properties prior to registration.

Income Tax

In a Civil Partnership, the higher income earner can reduce their tax payments by giving an income-producing asset to the lower earner, who pays tax at a lower rate. The donor loses control of the asset.

Pension

A surviving civil partner is entitled to similar pension benefits to that of a surviving spouse, and they can claim a state pension from the National Insurance contributions of a deceased civil partner. Unfortunately, this will only apply to future pension rights from the date of the Civil Partnership’s registration.