Pizzas galore!

Ministers raised concerns about the lack of legislative protection for cohabiting couples while finalising the Civil Partnership Bill, which means same-sex couples who register as “civil partners” are married in the eyes of the law. That comes into force on December 5.

News that the Law Commission will consult on enhanced protection for people who choose not to formalise their relationships has been welcomed by Resolution — formerly the Solicitors Family Law Association. It has been campaigning for changes to the law since 2000.

Jane Craig of Resolution said: “As family structures change and the number of couples living together outside marriage increases year-on-year, the law deperately needs to catch up. We believe there should be some kind of safety net to protect the financially weaker person in the event of a relationship breakdown, as all too often one of them is left with nothing.”

However, the Law Commission’s consultation is not due to reach a conclusion until 2007, and any resulting changes to the law will take even longer.

Fortunately, there are steps cohabiting couples can take to protect themselves in the meantime.

But superior legal protection is not the only financial reason to wed. Gordon Brown withdrew the married couple’s income-tax allowance in 2000 — although couples still qualify if one of them was born before April 6, 1935.

However, married couples and, from December, same-sex couples who become civil partners, still receive a number of tax breaks.

One of the main benefits is that husbands, wives and civil partners can transfer assets from one to the other tax-free.

For instance, a wife selling a piece of jewellery given to her by her husband would not be required to pay capital-gains tax (CGT) on the proceeds of the sale, no matter how much it had increased in value.

Married couples are also exempt from inheritance-tax liabilities on transfers between one another, and there are other bonuses for couples planning to get married.

Mike Warburton of Grant Thornton, an accountant, said: “Parents can give couples who are planning to wed up to £5,000 each and grandparents can gift up to £2,500 each, tax-free.

“Friends and relatives can also hand over up to £1,000, although there may be complications if the bride or groom is jilted at the altar.”

There are disadvantages, though. Unmarried couples can take advantage of CGT exemptions on two main residences — one each — when they come to sell them. However, married and civil-partner couples can only claim the allowance on one property between them.

And better-off couples who are thinking about using tax- avoidance measures such as trusts should be aware that any cash put into a trust for one of them is taxable on the donor’s income if they are married.

For cohabiting couples, the money is taxable on the recipient’s income.