Demographics shift to minority married

New data on marriage and civil partnerships shows a significant threshold has been crossed.

‘Population estimates by marital status and living arrangements, England and Wales: 2022’, sounds like a rather esoteric piece of academic output from the Office for National Statistics (ONS). However, its release in late January attracted a brief flurry of media attention for one new finding it revealed:

‘Married or civil partnered remained the most common legal partnership status among the population aged 16 years and over in England and Wales; however, this proportion has decreased from 51.2% in 2012 to 49.7% in 2021 and 49.4% in 2022, the first time this has fallen below 50.0%.’

The other story to this minority married proportion is an increase in cohabiting couples (140% up between 2002 and 2022) and the numbers of people ‘not living in a couple’ (17.7% up over the same period).

It is probably fair to say that government responses to these changes in the pattern of living have, at best, been mixed as the tax system illustrates:

·         In 2000, the basic married couple’s allowance was abolished, but 15 years later a new, less generous, transferable marriage allowance was introduced. This is also available to civil partners.

·         An unmarried couple are potentially liable to capital gains tax (CGT) and inheritance tax on gifts made between each other. Married couples and those in civil partnerships can generally make gifts to each other tax free.

·         The tax system treats an unmarried couple in the same way as their married counterparts when it comes to applying the high-income child benefit charge: it is the income of the higher income partner that matters, even if they are not a parent of the child.

The laws of intestacy are written in terms of spouses and civil partners. A survivor of a co-habiting, non-legally recognised couple could therefore receive nothing if their deceased partner had no will. In theory, the survivor may be able to make a claim (for example, under the Inheritance (Provision for Family and Dependants) Act 1975 in England & Wales), but that can lead to expensive legal disputes.

If you are one of the nearly seven million people who have decided to live together, make sure you understand and take advice on the financial consequences of your choice.

Tax treatment varies according to individual circumstances and is subject to change. The Financial Conduct Authority does not regulate tax advice.