Shaun Moore, tax and financial planning expert at Quilter comments on the ONS population estimates by marital status and living arrangements, and the implications for individuals in terms of their tax planning.
Despite a year of thousands of weddings getting postponed or cancelled due to the Covid restrictions, married or civil partnered remained the most common legal partnership status in 2020, accounting for just over half (50.6%) of the population aged 16 years and over in England and Wales. While this remains similar to previous years this has drastically changed over the decades.
Older people are much more likely to be married than younger people with a huge rise in popularity in cohabitation in those in their 20s and 30s. Now a not insignificant 13% of the population cohabit, which has risen 2% in the last ten years
Although there is nothing inherently wrong with this, unfortunately couples simply do not enjoy the same rights as spouses or civil partners on death, or the same financial protection as a married couple with children. They are effectively living as second-class citizens when it comes to tax rights.
Cohabitees are running the risk of not automatically inheriting anything on death, unless they jointly own property. By contrast, a married partner would inherit all or some of their partner’s estate, even without a will being left.
Similarly, cohabiting partners who stay at home to care for children have few legal rights on property, maintenance or pension-sharing, leaving them vulnerable in case of a breakup.
In contrast married partners have a legal duty to support each other, but cohabiting couples are not legally obliged to support each other financially.
Although the times are changing and the rise in home working has improved the balance, women do often continue to bear the brunt of childcare. This means cohabitation can be particularly damaging for woman who have taken a career break to look after children as they could be left in poverty when a relationship ends.
Until the law catches up with modern living habits, couples should carefully consider the financial benefits that becoming legally married or entering into a civil partnership can provide.
