Inheritance tax: Why are people in civil partnerships and married couples exempt, but not siblings or friends?

Dealing with the loss of a much-loved relative or friend is bad enough without having to put your home on the market

Rebecca Steinfeld and Charles Keidan want to be civil partners (Martin Godwin)

Giving tax breaks to couples who have sex? It doesn’t sound like mainstream Tory policy, but that’s the position (for want of a better word) that the Government has got itself into where civil partnerships are concerned. It admitted as much last week in the House of Lords, when a minister flatly refused to extend the current legislation to include brothers and sisters.

People in civil partnerships and married couples are exempt from paying inheritance tax when one of them dies. It confers a huge financial advantage: property values have risen dramatically in recent years, especially in London, and many homes are worth a lot more than the inheritance tax threshold of £325,000. Everyone else – siblings or unmarried friends, for instance – has to pay tax at 40 per cent on anything above the threshold.

Lord Lexden, who also happens to be the Tory Party’s official historian, has just tried to persuade the Government to remedy this injustice. He knows the present law creates anxiety for many elderly people, who face a potential tax bill running into hundreds of thousands of pounds. Often the surviving sibling has no option but to sell a home he or she has lived in for decades, placing the burden of a house move on someone who is already coping with a bereavement. Dealing with the loss of a much-loved relative or friend is bad enough without having to put your home on the market.

Lexden got short shrift from the minister, Baroness Williams of Trafford, who confirmed that there are no plans to change the law. The conversation between the two is fascinating, not least because they’re both Tories but on completely different sides of the argument. Williams’s response revealed the blinkered thinking that has characterised official responses ever since civil partnerships were first proposed by Tony Blair’s government. Williams recalled that they were introduced for same-sex couples at a time when they weren’t allowed to marry. “Civil partnerships are the equivalent of a marriage: a loving union,” she went on, as if anything else was self-evidently excluded.

It’s tempting to respond with a lecture on the many faces of love, quoting a variety of Greek philosophers. Is the Government really claiming to recognise only one kind, between two people who have sex with each other? What about the deep affection between sisters who have lived together for 30 years or close friends who have pooled their resources to buy a flat? If love is the test, as the minister appeared to imply, a whole range of domestic arrangements could claim to qualify.

I don’t think that this or previous governments intended to discriminate against people in non-sexual partnerships, but that’s been the outcome. Of course, two friends who jointly own a house could get married, but it would be widely assumed that they’re in a sexual relationship; in that sense, the law encourages pretence, which is all the odder when you consider how keen the Government is to crack down on “sham” marriages in immigration cases. And there’s another anomaly: civil partnerships aren’t open to two friends of the opposite sex, whether or not their relationship is sexual, because only same-sex couples are legally able to become civil partners.

This is what happens when the law is altered piecemeal, instead of using equality and fairness as guiding principles. The Blair government introduced civil partnerships in 2004 because ministers didn’t dare legislate for same-sex marriage. In effect, and without intending to do so, they created an alternative which also appealed to some heterosexual couples. That was a no-brainer: if you don’t like traditional gender roles, “partner” is a much more attractive description than “husband” or “wife”.

Some of us argued that the new law should apply to everyone, but more than a decade later straight couples still can’t become civil partners. It’s incoherent, to say the least, and a heterosexual couple is seeking a judicial review of the ban. Rebecca Steinfeld and Charles Keidan need to raise a substantial sum to cover their costs; being a modern couple, they’ve launched a crowd-funding campaign to pay for the case. Their legal action and last week’s intervention in the House of Lords are by no means the first attempts to remove the layers of discrimination built into the law.

Back in 2005, two sisters in their eighties argued that excluding them from a civil partnership was unfair as the surviving sister would have to sell the family home, which had previously belonged to their parents, to pay death duties. They didn’t get anywhere.

What’s beyond question is that the law governing adult relationships is a mess, for ideological reasons. It was the Conservatives – who are supposed to disapprove of social engineering – who recently introduced yet more discrimination into the system; from this April, married couples and civil partners have been able to claim a tax break which isn’t available to cohabiting partners – although only households on low incomes stand to benefit. So in another example of (I hope) unintended consequences, a couple where the husband abuses his wife could now be better off than an unmarried couple whose relationship is based on respect and equality.

In the modern world, adults expect to choose the living arrangements that suit them, not the government of the day; it isn’t up to ministers to make value judgements about the quality of people’s unions by enshrining discrimination in the law and the tax system. Most people aspire to loving and affectionate bonds, but they won’t always be sexual. Weirdly, when they talk about love, it’s the Tories who appear to have sex on the brain.

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