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Tony Wickenden: Mixed-sex civil partnerships’ impact on tax

Tony WickendenTax and pension matters involved in a civil partnership as we know them will extend to mixed-sex civil partnerships by the autumn

Every now and then legislation is made that, aside from having legal, commercial and human consequences, also has an impact on taxation. This is not the driver of the change that is the subject of this article, but there are important tax consequences.

The change is incorporated in the Civil Partnerships, Marriages and Deaths (Registration Etc.) Bill 2017-19 currently moving through parliament. Broadly speaking, it will ensure that civil partnerships in England and Wales are extended to straight couples.

The move comes in response to arguments there is inequality in the fact straight couples cannot choose between a civil partnership and marriage to formalise their relationship like same-sex couples can.

Civil partnerships were introduced for same-sex couples by the Civil Partnership Act 2004. In 2013, the Marriage (Same Sex Couples) Act 2013 legalised same-sex marriage in England and Wales, and the Marriage and Civil Partnership (Scotland) Act 2014 legalised same-sex marriage in Scotland. However, the law does not currently permit civil partnerships between straight couples anywhere in the UK.

The proposal to extend civil partnerships to straight couples comes after a Supreme Court case in June 2018, which ruled in favour of Rebecca Steinfeld and her partner Charles Keidan, who campaigned to be allowed to have a civil partnership. After the case, the court said the Civil Partnership Act 2004 was incompatible with the European Convention on Human Rights.

The Bill in question’s original explanatory notes state: “Under section 3(1)(a) of the Civil Partnership Act 2004, two people are not eligible to register as civil partners of each other if they are not of the same sex. Equivalent restrictions apply to eligibility for registration in Scotland and Northern Ireland under s.86 and s.138 of the Act.”

And: “Clause 2 [of the Bill] requires the Secretary of State to undertake an assessment (which may include assessing the demand for civil partnerships among opposite-sex couples) and then bring forward proposals for how the law ought to be changed to bring about equality of treatment with respect to the future ability of opposite-sex and same-sex couples to form a civil partnership.

“It then provides a power to amend the law accordingly. The power to make regulations is subject to the affirmative resolution procedure.”

In an amendment to the Bill, Conservative former minister Tim Loughton (who presented it in the first place) takes things a little further.

The amendment requires the government “to make regulations to bring about equality between same-sex couples and other couples within six months of the Bill becoming law”. This means civil partnerships are set to be extended to all by the autumn.

Prime Minister Theresa May says: “As home secretary, I was proud to sponsor the legislation that created equal marriage. Now, by extending civil partnerships, we are making sure that all couples, be they same-sex or opposite-sex, are given the same choices in life.”

The government has indicated that there are still a number of legal issues to consider and ministers are consulting on the technical detail.

The Scottish government has also launched a consultation (which closed on 21 December 2018) on the possibility of extending civil partnerships to mixed-sex couples in Scotland.

Consequences for tax and pensions
All the tax consequences of a civil partnership as we currently know them will extend to a mixed-sex civil partnership – for example, the inheritance tax transferable nil-rate band and residence nil-rate band, exempt IHT transfers and no-gain/no-loss transfers for capital gains tax. The proposed extension would definitely deliver a benefit to the survivors of pension scheme members.

The exact nature of survivors’ benefits is subjective and varies by scheme and by category of survivor but the key point is that survivors’ benefits, whatever their exact form, will be available to a wider range of individuals.

Good for the survivors in mixed-sex civil partnerships, but the corollary is that there will be additional cost and potential funding implications for the schemes affected.

Tony Wickenden is joint managing director of Technical Connection (a St James’s Place Wealth Management group company). You can find him Tweeting @tecconn



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  1. Interesting and informative.

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