Civil partners tax

The Government has announced that the Civil Partnerships Act will come into force on 5 December 2005. As part of their preparations for the 'big day', same sex couples should consider the legal implications of their new status, particularly for inheritance rights and taxation.

A civil partner will, for all tax purposes, be treated the same as a spouse. That's generally a good thing - for example, they will all benefit from the 'spouse exemption' for inheritance and capital gains tax purposes. That means lifetime gifts between civil partners will be tax-free and on the death of one partner, his or her estate will pass free of inheritance tax to the other. However, civil partners who both own their own properties will only be eligible for one capital gains tax main residence exemption between them.

Tax isn't the only issue to consider. Civil partners, like married couples, will have clear intestacy rights where one dies without leaving a will. However the intestacy rules often create unexpected and unwelcome results, either by leaving too little or sometimes too much to the surviving partner. The best advice is to draw up a will that lets you decide exactly who gets what.

If you have any questions regarding the impact of the Act on the ownership of your assets, or on your tax position or succession planning then please contact:

Sarah Albury
Tel +44 (0)20 7440 7042
sarah.albury@mishcon.com