On 17 July 2013 the Marriage (Same Sex Couples) Act 2013 ("the Act") received Royal Assent. The Act applies to same sex couples in England and Wales and enables them to enter into a legal marriage as an alternative to a civil partnership. Existing civil partners are also able to convert their civil partnership to a marriage.
Regulations are needed to bring the main provisions of the Act into force and these are not expected until the new year, but once in place, the effect will be that same sex married couples will generally be afforded the same rights under the law of England and Wales as opposite sex married couples. This will include tax reliefs. Take inheritance tax for example. Opposite sex married couples and civil partners are entitled to a "spouse exemption", meaning that assets that pass from one to another on death or via a lifetime gift are exempt from tax. Under the Act, same sex married couples will be entitled to this exemption.
What happens however, where a same sex spouse owns foreign assets? These may be subject to inheritance tax in the foreign jurisdiction on death as well as in England and Wales. Whilst the spouse exemption will apply in England and Wales, if the jurisdiction concerned does not recognise same sex marriage, the surviving spouse may face an unexpected foreign tax bill.
Thankfully, following a ruling in the US Supreme Court this summer, the US now recognises same sex marriage and same sex married couples with US assets will be entitled to the same exemption from US federal estate duty as opposite sex married couples. Kate Davies, a solicitor in the Private Client team at Wedlake Bell, discusses the US ruling and the wider issue of tax equality for same sex couples with worldwide assets in this article published in Diva Magazine, reproduced here with kind permission.
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