The Government’s consultation, ‘A Fairer End to Relationships’, closed in August 2026 and is now under review.
The consultation marks a potentially significant step towards reform, seeking to address the disconnect between how many couples live their lives and how their relationships are recognised by the law.
Comments made by comedian Ricky Gervais recently sparked discussion in the media after he revealed that he may marry his long-term partner, Jane, of 44 years due to the IHT advantages available to married couples.
Caitlin Davis from the family team at Wake Smith Solicitors looks at the issue.
“Despite sharing their lives and intermingling their finances, if Ricky were to die before Jane whilst unmarried, she would be liable for a substantial inheritance tax bill. If married, Jane would be automatically exempt from IHT.
“Until the law changes, planning remains essential to provide couples with certainty, including, but not limited to, Wills, Cohabitation Agreements and Declarations of Trust.
“The debate continues; should legal and tax protections be reserved for those who choose the legal status of marriage or civil partnership? Or should the law recognise and protect long-term cohabiting couples?”
How the law stands
Married couples and civil partners are entirely exempt from IHT, regardless of the estate’s value, provided the recipient spouse is legally married or in a civil partnership and a long-term UK resident (from 6th April 2025, for IHT purposes, the concept of domicile is replaced by long-term UK residence).
The IHT Spouse Exemption applies to:
- Gifts made during lifetime (Potentially Exempt Transfers)
- Transfers on Death under a Will or Intestacy
- Non long-term UK resident spouses have a limited exemption of £325,000, but a special election can treat them as long-term UK resident for full exemption
Cohabiting couples who are not legally married do not qualify for this exemption.
IHT Nil-Rate Band (NRB) and Residence Nil-Rate Band (RNRB)
Each individual has a NRB of £325,000, which applies to all chargeable estate assets.
Additionally, each person may have a RNRB of up to £175,000, applicable to a qualifying residential property passed to direct descendants (children, grandchildren, stepchildren, or adopted children).
Transferring Unused Allowances
For married couples or civil partners, any unused percentage of the NRB or RNRB on the death of the first party (if the couple or civil partners left their entire estate to each other, it would pass as fully spouse exempt from IHT meaning that no NRB or RNRB would be used) can be transferred to the second:
Combined NRB: £325,000 × 2 = £650,000
Combined RNRB: £175,000 × 2 = £350,000 **
Maximum combined threshold: £650,000 + £350,000 = £1,000,000
** The RNRB tapers down for estates exceeding £2million, reducing by £1 for every £2 above this threshold
If you are seeking greater certainty about your financial future upon entering a marriage, specialist legal advice can help ensure your interests are protected. For further advice please contact Wake Smith on 0114 266 6660 or email [email protected]
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