A significant shift in inheritance tax rules announced by Chancellor Rachel Reeves is driving a wave of weddings among older, unmarried couples across the UK. The confirmation that pension pots will be included in calculations for the levy has led many to consider matrimony as a vital financial safeguard.
The Tax Change Prompting "I Do"
Chancellor Rachel Reeves has confirmed that pension pots will be included in inheritance tax calculations. This move has sent shockwaves through the retirement community, particularly affecting long-term partners who are not married or in a civil partnership. For them, inheriting a partner's pension could now attract the standard inheritance tax rate of 40%.
In stark contrast, married couples and civil partners benefit from a crucial spousal exemption. This rule allows them to share tax-free allowances and potentially pass on up to £1 million to the next generation without incurring the hefty charge. The disparity has created a powerful financial incentive for cohabiting retirees to formalise their relationships.
A Real-Life Tax Proposal
The human impact of this policy is already evident. Steve Jenner, 69, and Shirley Stepney, 74, from Hampshire, decided to marry after nearly three decades together following advice from a financial consultant. "All of a sudden, he said, 'You realise, Steve, you've got a big inheritance tax problem,'" Mr Jenner recalled.
The adviser highlighted that Mr Jenner's final salary pension would expose them to the 40% charge once the new rules take effect. "And at this point he virtually proposed to my now-wife on my behalf," said Mr Jenner. He then turned to his partner and asked, "will you marry me?" to which she replied, "If I have to!"
The couple described their wedding as "quite relaxed and low-key," noting that the registrar remarked, "you'd be amazed how many older people we are marrying now."
Professionals See a Growing Trend
Legal and financial experts report a marked increase in enquiries from older clients. Elliot Lewis of Thackray Williams stated, "We're talking to more older unmarried clients who are considering getting married to protect their pension pots to ensure their partners will have a secure financial future when they pass. We expect marriages among retirees to increase through 2026 ahead of the 2027 tax changes."
Family lawyer Judit Kerese of Stowe Family Law observed a similar pattern: "We're seeing a marked increase in older couples choosing to marry, especially after significant periods of living together unmarried, not purely for romantic reasons, but for tax certainty."
The financial stakes are clear. For an unmarried partner inheriting a £100,000 pension, tying the knot could mean completely avoiding a £40,000 tax bill. This substantial saving is compelling many to view marriage as a critical component of later-life financial planning, fundamentally changing the landscape of retirement and inheritance for thousands of couples in the UK.
