Marriage, civil partnerships and why landlords should not ignore the obvious

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Marriage, civil partnerships and why landlords should not ignore the obvious

When Martin Lewis recently described marriage as the “ultimate inheritance tax hack”, he was making a technical point rather than a romantic one. The same principle applies equally to civil partnerships.

If you are legally married or in a registered civil partnership, you can leave your entire estate to your spouse or civil partner free of inheritance tax. If you are cohabiting without that legal status, you cannot.

For landlords with substantial portfolios, that difference is not theoretical. It can determine whether six figures remain within the family or are paid to HMRC.

This is not about sentiment. It is about structure.

The spousal and civil partner exemption landlords overlook

Under current UK rules:

• Each individual has a £325,000 nil rate band.

• There is an additional residence nil rate band of up to £175,000 when a qualifying main residence passes to direct descendants.

• Any unused allowances transfer to a surviving spouse or civil partner.

• Transfers between spouses or civil partners are exempt from inheritance tax, both during lifetime and on death.

In practical terms, a married couple or civil partners can often pass on up to £1 million free of inheritance tax, provided their estate includes a qualifying residence and planning is aligned.

Unmarried, non-registered couples cannot transfer unused allowances. There is no automatic exemption, regardless of how long they have lived together.

Only legal status counts.

For landlords sitting on appreciating property assets, that distinction materially alters long-term outcomes.

Why this matters more in later life and second relationships

Many landlords rebuild their personal lives after divorce or bereavement. They may have lived with a new partner for years. They may share property and financial responsibilities. Yet unless they marry or register a civil partnership, inheritance tax law treats them as unrelated individuals.

On first death, assets passing to an unmarried partner may face inheritance tax at 40% above available thresholds. There is no deferral. No automatic doubling of allowances.

In a £1.5 million property-heavy estate, that can translate into a substantial and immediate tax liability. That is capital which could otherwise stabilise borrowing, support the survivor, or preserve assets for children.

Entering into marriage or a civil partnership in this context is not simply a personal decision. It is a liability management choice.

The commercial lens landlords instinctively understand

Property investors routinely assess structure, risk and efficiency.

Viewed commercially, marriage or civil partnership does three powerful things:

1. It permits unlimited transfers between spouses or civil partners without inheritance tax.

2. It defers inheritance tax entirely on first death.

3. It allows full transfer of unused nil rate bands, effectively doubling the available thresholds for the survivor’s estate.

This creates time and flexibility. Time to refinance. Time to reorganise ownership. Time to plan succession deliberately rather than reactively.

For landlords focused on business continuity and legacy, that flexibility can be more valuable than any single tax saving.

For couples who choose not to formalise the relationship

There will always be personal reasons not to marry or register a civil partnership. That is entirely legitimate.

The key is awareness. Wills, trusts, lifetime gifting and life assurance can all mitigate exposure, yet none replicate the simplicity and certainty of the spousal or civil partner exemption. They introduce additional cost, complexity and ongoing administration.

Choosing not to formalise a relationship should be a conscious, informed decision, not a structural oversight.

Inheritance tax planning is rarely about the tax itself. It is about security for the person left behind, protection for children, and preserving the value of a lifetime’s work.

For landlords, marriage or civil partnership remains one of the most powerful structural tools available under UK inheritance tax law. Surprisingly, it is also one of the most frequently overlooked.

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