Couples who have signed a civil partnership are treated the same as a married couple by HM Revenue & Customs (HMRC).
If you are considering a civil partnership talk to your financial adviser. On the whole, the treatment of the couple within a civil partnership will be more advantageous than that of two single people, but even so there are issues to consider.
In general, if you read or hear about any financial issue that affects married couples, or couples getting married, then it probably applies to you as a couple in a civil partnership.
Key areas are:
Treated as a married couple.
Capital gains tax
Civil partners can pass assets between partners without charge (CGT is incurred when the asset is eventually sold to a third party, with the gain based on the original acquisition cost).
Sale of residence
Married couples are only allowed one principal private residence that can be sold for a tax free gain. If you are considering a civil partnership and each of you currently owns your own home, talk to us. Planning could save you a tax if you sell one of these homes.
Civil partners will be able to inherit from each other without incurring inheritance tax.
Civil partners will be treated as spouses, ex-civil partners as ex-spouses etc. with regard to the taxation of pensions. However this is a classic case of careful wording where what is NOT said is probably more important.
What civil partners normally want is to be treated identically to married couples for the purposes of pension scheme benefits. You should consult your pension scheme administrator and find out what the scheme’s policy is.
Business issues and anti-avoidance
There is a range of rules that apply to married couples to prevent abuse of the tax system, and these will also apply to civil partners.
Most people will not be affected in practice, (because they do not have the kind of financial affairs that give rise to avoidance issues), but if you are a couple considering a civil partnership and you are in business together, or engage in financial deals together, then your civil partner might well become deemed a ‘controlling director’, or ‘associated person’ for the purposes of determining business control and transaction validity.
In particular any requirement for a transaction to be ‘arm’s length’ cannot normally be met by a spouse, and so would not normally be met by a civil partner.
Certain State benefits, although claimed by one person, take the circumstances of the couple into account. If either of you is in receipt of benefits, you should establish what would happen to these benefits if you entered into a civil partnership.