The Chartered Institute of Taxation has recently reported on the call by a campaign group (LITRG) for a “review of legislation and practice to achieve consistency in the definition and treatment of couples for different tax and benefit purposes.” The LITRG Press Release highlights how married couples face considerable complexity in the tax system with different rules applying for different purposes.
They also highlight the issue of bereavement support for couples who are not married or in a registered civil partnership. Married couples and civil partners are potentially entitled to some bereavement benefit when one of the partners dies. Depending on, for example, National Insurance records and age, this could be a Bereavement Payment, which is a one-off tax free lump sum of £2000, a Bereavement Allowance (which replaced the Widow’s Pension) which is payable for 52 weeks, and, if they have children, to a Widowed Parents’ Allowance. All these payments depend on the couple being married or in a civil partnership.
As well as the points highlighted by the LITRG, it should be remembered that entitlement under the intestacy rules, which apply when someone dies without leaving a Will, also depends on a couple being married or civil partners. The survivor of an unmarried couple has no entitlement under the intestacy rules so would be entitled to receive none of the assets in their deceased partner’s sole name as of right. Although a potential claim against the estate may exist under the Inheritance (Provision for Family and Dependents) Act 1975 this is a stressful option, particularly at a time of such emotional distress.
Unmarried couples should for this reason always make a Will. It should also be borne in mind that there is no surviving spouse exemption from Inheritance Tax for unmarried couples and so planning for payment of this tax, and taking action to reduce its impact, is also something which unmarried couples should prioritise, particularly if they have children.