The ONS has published details of marital status and living arrangements for 2022: Population estimates by marital status and living arrangements, England and Wales - Office for National Statistics (ons.gov.uk)
Sarah Coles, head of personal finance, Hargreaves Lansdown: “There’s strength in numbers, and couples tend to be much better off financially than people living on their own. Most people end up coupling up at some stage, which is likely to leave them better off when it comes to money. However, we’re far more likely to be living with someone than we are to be married to them, which means we risk having the rug pulled out from underneath us at any time.
The latest edition of the HL Savings & Resilience Barometer shows life continues to be a financial slog for people living on their own. Only half of singletons (50%) have enough emergency savings (to cover at least 3 months’ worth of essential expenses), compared to around three quarters of couples without kids (77%). Those living on their own also have an average of £119 left at the end of the month, compared to couples with £371. Couples are also more likely to own their own home and be on track for retirement.
However, the only thing that’s worse for your finances than being single, is being in a couple with the wrong person – and paying the price of a split. If you’re married, there’s the stress and expense of a divorce, but most couples aren’t married, so they face all the risks of living together and splitting up.
5 prices cohabitees pay on a split
If you split up and one of you owns the house in their name, the other may have no right to live in it or to a share of the property.
On the flip side, if the property belongs to one of you entirely, but the other has contributed towards it in some way - including paying a share of the bills or helping with home improvements, they can claim an ‘interest’ in it, and go to a court for a share of the property.
It means couples who move in together may have made a bigger commitment than they appreciate.
If you split up, and one of you has sacrificed their career for caring responsibilities, they have no right to spousal maintenance. On average, women’s pay falls 7% for each child they have – so without maintenance to make up the difference, this could leave them thousands of pounds worse off each year.
In the event of a split, if one of you has a sizeable pension and the other has nothing, there’s no right to share.
If you have taken on debts or hold savings unevenly, there’s no automatic right to have this balanced out – even if one of you is holding savings for you both, or you have taken on debts for a joint project.
5 cohabiting risks even if you stay together for life
If one of you dies without a will, the other could get nothing. If the home is in their name, you could lose your home too. If your partner has children, everything passes to them. Otherwise, it goes to their parents. If you have children, the father isn’t on the birth certificate, and the mother dies, the father doesn’t automatically have a right to care for the child
Most pensions will pay out to a spouse when you die. If you’re not married, you can complete a ‘nomination of beneficiaries’ form, to ask for anything to pass to your partner, but if you don’t complete the form there are no guarantees that this will happen.
If one of you dies and leaves everything to the other, in a marriage or civil partnership this would all be free of inheritance tax. If you’re not married and you breach the inheritance tax nil rate bands, there could be tax to pay. In some cases, this could mean you can’t afford to stay in your home.
There are no inheritable ISAs. If your spouse holds an ISA on death, you will get an additional ISA allowance – called an Additional Permitted Subscription, which essentially means ISA assets they leave you can all be wrapped up in an ISA again without affecting your allowances. If you’re not married, you don’t get this extra ISA allowance.
There are tax disadvantages. We all have a personal allowance that’s not subject to income tax, a personal savings allowance, a dividend allowance and a capital gains tax allowance. Married couples can share assets between them to take advantage of both people’s tax allowances (and their annual ISA and pension allowances too), and the lower taxpayer can hold the balance. If unmarried couples try to do this, sharing the assets could trigger a tax bill.”
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