Civil Partnership, PACS or Marriage: Will My PACS Be Recognised in the UK for Inheritance Tax?


Expert FAQs

Civil Partnership, PACS or Marriage: Will My PACS Be Recognised in the UK for Inheritance Tax?

Charlotte Macdonald is a consultant associate solicitor in Stone King’s international and cross-border team. In her FAQ series for FrenchEntrée, she answers legal and practical questions that are often asked by her clients in relation to France; whether that be buying or selling property in France, inheritance law, or how inheritance and capital gains tax are treated between the UK and France.

There are numerous reasons that people decide to tie the knot with their significant other. Amongst others, these reasons include: love, security, a demonstration of commitment, legal and financial.

However, in the UK and in France, these days you do not have to get married to obtain many of the benefits that traditionally only came with marriage. Both same sex and opposite sex couples can now opt to enter into a civil partnership in the UK, and in France both same sex and opposite sex couples can enter into a PACS (Pacte Civil de Solidarité).

If you are concerned about your partner paying inheritance tax on your death then it would be worth considering civil partnership, PACS or marriage.

Civil Partnership in the UK

Until recently (late 2019) it was not possible to enter into a civil partnership if you were a heterosexual couple. If you wanted legal protection and recognition of your relationship it was necessary to get married.

A change in the law, bought about by campaigning, now allows for heterosexual couples to enter into civil partnerships.

If you enter into a civil partnership, the legal rights that you get are broadly the same as marriage.

From an inheritance and succession point of view this means that if you die without a will, your civil partner will have inheritance rights.

If you make gifts during your lifetime to your civil partner, or they inherit from you on your death, all these gifts and inheritances are exempt from inheritance tax.

PACS in France

Heterosexual couples living in France have had the option to enter into a PACS for many years. As in the UK, once you have entered into a PACS, you have the same gift tax/inheritance tax allowances as a married couple.

You do not, however, gain any inheritance rights, so it is strongly recommended that you make a will to ensure that your civil partner is looked after.

Will my PACS be recognised in the UK for inheritance tax?

Further to the 2019 change in law, a PACS between both opposite and same sex couples, will now be recognised in the UK as equivalent to a UK civil partnership.

This means that if you were PACS’ed in France and leave your UK-located home to your civil partner, they will not have to pay UK inheritance tax following your death.

As the UK inheritance tax rate, after the estate’s tax-free limit, is generally 40% it can provide a huge saving to your partner at what is likely to be a difficult time.

For more information about the cross border treatment of your civil partnership, wills or inheritance tax please contact the international and cross-border team at Stone King LLP – Charlotte Macdonald, Dan Harris, Raquel Ugalde, Emma Seaton, Bryony Anning or Graeme Beattie, either by calling +44(0)1225 337599 or by emailing [email protected].

Article written by Charlotte Macdonald and trainee solicitor Bryony Anning.

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