Finance (N0.3) Bill 2011, Civil Partnership and Co-habitants: Our views

Re Civil Partnerships:

Beryl Power, Senior Manager, PwC Private Client Services said:

"We welcome the recent publication of the Finance (No.3) Bill 2011 which provides for changes to existing tax legislation following the passing of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 ("the Act"). The changes will essentially regularise the tax system to allow registered civil partners entitlement to the same tax benefits that married couples enjoy."

Re Co-habitants:

Beryl Power, Senior Manager, PwC Private Client Services added:

"In contrast to registered civil partners, the rights of cohabitants have not been significantly increased by the Finance (No.3) Bill 2011. Many cohabitants may have been expecting to benefit from the changes and will be disappointed that they will not be entitled to the same tax advantages as married couples or registered civil partners.

Cohabitants will only be entitled to tax relief in very limited circumstances. They will be still treated as "strangers" under tax legislation. This means that a gift or inheritance of the family home, pension entitlements, or other property between cohabitants will be taxed as if they were strangers. For example, if a cohabitant receives a gift of a property worth say €1 million from their partner, they could face a gift tax bill of €250,000; whereas a married person or a registered civil partner would receive such as benefit tax-free.

The only circumstances where cohabitants can obtain tax relief is where a court order is made under the Act for provision for the dependant cohabitant, such as property, pension or maintenance provision. Where such an order is made the property, can pass tax-free between the parties involved. But these applications can only be made following a break-up of the relationship or on death."

ENDS

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