In modern Britain, many couples build long term, committed lives together without ever formally marrying. That is, of course, a personal choice. However, when it comes to Inheritance Tax, the law has not kept pace with that shift.
Inheritance Tax rules for married and unmarried couples explained
One of the most significant advantages of marriage or civil partnership is the Inheritance Tax exemption between spouses. When one partner dies, assets can pass to the surviving spouse free of Inheritance Tax, regardless of value.
For unmarried couples, the position is very different. No matter how long you have been together, transfers between partners can be taxed at 40 per cent above the available thresholds. This can create a substantial and often unexpected liability.
Marriage also allows couples to combine their nil rate bands, meaning up to £1 million can potentially pass free of Inheritance Tax, subject to the residence nil rate band. Unmarried couples simply do not have access to this.
How to protect your partner and reduce inheritance tax liability
This is not just theory. We regularly see clients come in for estate planning advice, only to realise the exposure they face. In many cases, those conversations are followed fairly quickly by a trip to the registry office.
Interestingly, this came to mind while watching At Home with the Furys. It highlights how even high net worth individuals, such as Tommy Fury and Molly-Mae Hague, can build significant wealth and families without marrying, yet still be exposed to a potentially large Inheritance Tax bill.
Marriage is not for everyone, and it should never be purely a financial decision. But from a planning perspective, it remains one of the simplest and most effective ways to protect your partner.
Speak to our inheritance tax planning team today
If you are in a long term relationship and have built up assets, it is worth understanding the position.
Our private client team provides clear, practical advice on inheritance tax planning, wills, and protecting your partner’s future. We will review your circumstances, explain your options in plain English, and help you put the right structure in place.
Contact us today to arrange a confidential discussion and take the first step towards securing your estate for the people who matter most.