Cohabiting Couples and Property Tax in the UK 2026/27
Tax and legal risks for unmarried couples who own property together: CGT on transfers, Stamp Duty on buy-outs, Inheritance Tax exposure and why a will and deed of trust matter.
Why Cohabiting Couples Face a Different Tax Position
More than 3.6 million couples in the UK live together without marrying or forming a civil partnership, according to ONS estimates, making cohabitation the fastest-growing family type. Yet UK tax and inheritance law has not caught up: the reliefs and exemptions built around marriage do not extend to cohabiting couples, however long the relationship or however many joint financial commitments exist.
This matters most acutely around property, because a home is usually the largest joint asset a couple owns and the one most likely to trigger a tax charge on death, separation or a change in ownership shares.
No Spousal CGT Exemption on Transfers
Married couples and civil partners can transfer assets between themselves on a "no-gain/no-loss" basis for Capital Gains Tax purposes, meaning no CGT arises on the transfer itself -- the recipient simply inherits the original owner's base cost.
Cohabiting couples do not get this treatment. If one partner transfers a share of a property (or any other chargeable asset) to the other, HMRC treats this as a disposal at market value. If the property has risen in value since it was bought, and it is not fully covered by Private Residence Relief (which applies to a main home), CGT may be due on the gain attributed to the transferred share.
For 2026/27, CGT on residential property gains is charged at 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers, after deducting the £3,000 Annual Exempt Amount. If the property being transferred is a buy-to-let or second home rather than the couple's only residence, this can produce a real tax bill even though the transfer is between partners rather than a sale to a third party.
Joint Tenants vs Tenants in Common
How a couple holds legal title to a property has major consequences if the relationship ends through separation or death.
| Ownership type | What happens on death | Can shares be unequal? |
|---|---|---|
| Joint tenants | Survivor automatically inherits the whole property (right of survivorship), regardless of any will | No -- always equal |
| Tenants in common | Deceased's share passes according to their will (or intestacy rules if no will) | Yes -- shares can reflect unequal contributions |
Couples who contributed unequal deposits or mortgage payments often prefer tenants in common with a deed of trust recording the agreed split, so that on sale or death the correct proportion of proceeds goes to each partner or their estate.
No Automatic Inheritance Rights Without a Will
This is the single biggest risk cohabiting couples face. Under English and Welsh intestacy rules, a surviving cohabiting partner has no automatic right to inherit anything from their partner's estate, no matter how many years they lived together or how many children they had together.
If the property was held as joint tenants, the survivor keeps the home through survivorship regardless of the will situation. But if it was held as tenants in common, or owned solely by the deceased partner, the deceased's share can pass to their children, parents or other blood relatives under the intestacy rules -- potentially leaving the surviving partner with no legal right to remain in the home.
Inheritance Tax Calculator
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Estimate a potential Inheritance Tax billMaking a Will Is Not Optional for Cohabiting Couples
A properly drafted will naming the surviving partner as a beneficiary is the most effective single step a cohabiting couple can take. Without one, a partner may need to bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975 to secure reasonable provision from the estate -- a route that is available after at least two years of cohabitation or financial dependency, but which involves court proceedings, legal costs and no guaranteed outcome.
Mirror wills (each partner leaving broadly the same provisions to the other) are the standard solution, often paired with life insurance policies written in trust so that a payout on death goes directly to the surviving partner without forming part of the estate (and therefore without adding to any Inheritance Tax liability).
Inheritance Tax Exposure Between Partners
Married couples and civil partners benefit from an unlimited spouse exemption for Inheritance Tax -- assets left to a surviving spouse pass completely free of IHT, regardless of value, and any unused nil-rate band can also transfer to the survivor.
None of this applies to cohabiting couples. A gift or bequest from one partner to another is treated the same as a gift to any unrelated person. The nil-rate band of £325,000 and the residence nil-rate band of £175,000 (available where a main residence passes to direct descendants, not partners) still apply, but any value above the available thresholds is taxed at 40% -- even where the deceased fully intended the survivor to keep the family home.
This can create serious practical problems: a surviving partner may need to sell the home to pay an IHT bill on a property they have lived in for years but never owned outright, and cannot claim any exemption simply because they were not married to the deceased.
Stamp Duty When One Partner Buys the Other Out
When a relationship ends, or when a couple reorganises ownership, it is common for one partner to buy out the other's share of a jointly owned, mortgaged property. HMRC's SDLT rules treat the assumption of mortgage debt as "chargeable consideration," even if no cash price is formally agreed.
For example, if a couple owns a property with an outstanding mortgage of £300,000 held equally, and one partner takes over the whole property (and therefore the whole mortgage), the chargeable consideration for SDLT purposes is broadly half of the mortgage debt taken on from the departing partner -- £150,000 in this example. If that figure exceeds the SDLT nil-rate threshold, SDLT becomes payable on the transfer, on top of any additional-property surcharge that may apply depending on the buyer's other property ownership.
Cohabitation Agreements and Deeds of Trust
A cohabitation agreement is a private contract setting out how a couple's property, savings and other assets will be divided if the relationship ends. It has no direct tax effect but provides legal clarity that cohabiting couples otherwise lack, since English law (outside Scotland) does not treat unmarried partners as having automatic financial claims against each other on separation, unlike divorcing spouses.
A deed of trust achieves something similar specifically for the home, recording the proportion each partner owns -- useful where deposits, renovation costs or mortgage payments were unequal.
Practical Steps for Cohabiting Couples
- Decide whether to hold the property as joint tenants or tenants in common, and document the choice
- If tenants in common, record ownership shares in a deed of trust
- Make mirror wills naming each other, reviewed whenever circumstances change
- Consider life insurance written in trust to provide funds outside the estate
- Get advice before transferring shares in a property that is not a shared main residence, due to potential CGT
- Get advice before restructuring ownership involving mortgage debt, due to potential SDLT
- Consider a cohabitation agreement to cover separation as well as death
None of these steps fully replicates the tax position of marriage or civil partnership, but together they close most of the practical gaps that catch cohabiting couples out.
Sources
Frequently asked questions
Do unmarried couples get the same tax treatment as married couples?
No. Married couples and civil partners benefit from no-gain/no-loss transfers for Capital Gains Tax and an unlimited Inheritance Tax spouse exemption. Cohabiting couples get neither -- transfers of assets between unmarried partners can trigger CGT, and there is no IHT exemption on gifts or bequests to a partner.
Does my partner automatically inherit our home if I die without a will?
Not necessarily. Under the intestacy rules, an unmarried partner has no automatic right to inherit, regardless of how long you have lived together. If the property is held as joint tenants, the survivor usually keeps it through survivorship, but if it is held as tenants in common, or solely owned, the deceased's share can pass to children or other relatives instead of the surviving partner.
What is the difference between joint tenants and tenants in common?
Joint tenants each own the whole property equally, and on death the survivor automatically inherits the deceased's share regardless of any will (the right of survivorship). Tenants in common each own a defined share (not necessarily equal), which can be left by will to anyone, and does not automatically pass to the surviving partner.
Do I pay Capital Gains Tax if I transfer my share of the house to my partner?
Potentially, yes. Unlike spouses, unmarried partners do not qualify for no-gain/no-loss transfers. If the property is not your only or main residence, or if the transfer is not covered by Private Residence Relief, CGT may be due on any increase in value of the share transferred, calculated against market value even if no cash changes hands.
Does Stamp Duty apply when one partner buys out the other?
Yes, potentially. If one partner takes over the other's share of a mortgaged property, HMRC treats the mortgage debt assumed as 'chargeable consideration' for Stamp Duty Land Tax purposes. If that consideration exceeds the SDLT nil-rate threshold, SDLT is payable, even though no cash purchase price was agreed between the couple.
What happens to Inheritance Tax if my partner dies and leaves me the house?
There is no spouse exemption for unmarried couples, so the value of the property (minus the nil-rate band and any residence nil-rate band the deceased is entitled to use) can be subject to Inheritance Tax at 40% if the estate exceeds the available thresholds. A will leaving the property to a cohabiting partner does not avoid this exposure.
Can a cohabiting partner claim against the estate if left out of a will?
Yes, in some circumstances. Under the Inheritance (Provision for Family and Dependants) Act 1975, a cohabiting partner who lived with the deceased for at least two years before death, or who was financially dependent on them, can apply to the court for reasonable financial provision from the estate. This is a legal claim, not an automatic entitlement, and can be costly and uncertain.
What is a deed of trust and why do cohabiting couples need one?
A deed of trust (also called a declaration of trust) is a legal document that records how a jointly owned property is held -- for example, unequal ownership shares reflecting different deposit contributions. It provides clear evidence in the event of a dispute or separation, since cohabiting couples have no automatic right to a share of property based on relationship status alone, unlike divorcing spouses.
Can I claim Marriage Allowance if I am cohabiting but not married?
No. Marriage Allowance, which lets one partner transfer £1,260 of unused Personal Allowance to a spouse or civil partner, is only available to married couples and registered civil partnerships. Cohabiting couples, however long they have lived together, do not qualify.
How can cohabiting couples protect themselves without getting married?
Common steps include: making mirror wills that name each other as beneficiaries, taking out life insurance written in trust for the surviving partner, using a cohabitation agreement to set out how property and finances will be split on separation, and holding property as tenants in common with a deed of trust specifying ownership shares. None of these fully replicate the tax reliefs available to married couples, but they reduce legal uncertainty.
Try the calculators
Capital Gains Tax Calculator
Calculate Capital Gains Tax on property, shares and other assets for 2025/26.
Inheritance Tax Calculator
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Stamp Duty Calculator
Calculate Stamp Duty Land Tax (SDLT) for your property purchase in England.
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