Tax and your partner Married couples, civil partners and cohabiting
There are different tax rules for cohabiting couples
All couples, whether they are married, in a civil partnership or cohabiting are taxed as individuals. Every person is entitled to the first slice of their income free of tax – this is called the ‘personal allowance’.
In the 2009-2010 tax year everyone under 65 had a personal allowance of £6,475 and during the tax year 2010-2011, the allowance is the same.
However you can't transfer any unused portion of your personal allowance to your partner if your income is less than this amount.
Married couple’s allowance
The married couples allowance, which reduces the amount of tax you pay, now only applies if you or your spouse or civil partner was born before 6 April 1935.
You can find out more about the married couples allowance in our guide to tax and allowances for older people.
Living together
The crucial differences you need to be aware of if you're cohabiting are:
- The surviving partner has no automatic right of inheritance when one of you dies
- If you don't make a will, relatives rather than your partner inherit
- You may have to pay capital gains tax or inheritance tax if you transfer assets between you
- You're not entitled to the married couple's allowance even if you or your partner were born before 6 April 1935
- You can't claim any of the state bereavement benefits available to widows or widowers
Separated or divorced
You don't pay tax on payments that you receive under a maintenance agreement.
You can claim tax relief on maintenance payments you make if you or your ex-partner were born before 6 April 1935. The most you can claim is the lower of either the amount you pay or £2,670 in 2009-2010 and 2010-2011.
Relief is given as a 10% reduction in your tax bill, giving a maximum reduction of £267 for 2009-2010 and 2010 -2011.
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