Martin Lewis issues chilling warning as cohabiting couples could lose thousands to inheritance tax

Martin Lewis’s newest podcast offering, the aptly titled Not The Martin Lewis Podcast, saw the finance guru delve into the intricacies of inheritance tax with a wide range of experts in the field. However, the money-saving expert is no stranger to the topic and kicked off the show with his top tips and a major warning.

While he explained some of the exemptions that Britons can make the most of to strategically avoid paying as much inheritance tax as possible, he pointed out that two techniques rely on a couple being expressly bound together. He explained: “We are only talking about marriage and civil partners.

“It’s worth noting, therefore, if you live with someone, they were your lifelong partner, and you have 722 children with them, that doesn’t count as a marriage,” he explained. Martin also explained that anything a person leaves to their marriage or common-law partner is completely exempt from inheritance tax, saying: “You can leave them whatever you want, inheritance tax will not be paid on it.”

But he added that cohabitants are not exempt. So within the financial system, one of the great benefits of marriage is this exemption from inheritance tax, and he said previously that to avoid tax people have to be married.

Citizens Advice highlighted the potential problems with these, advising that they could end up in court: “If you lived with the person who died but were not married to them, you would not inherit under the intestacy rules. However, you can apply for financial help in court. He must have lived with them for at least two years, immediately before their death.”

Some of his other advice included the £325,000 cap, which means an estate is not subject to inheritance tax if it falls below that threshold and can be taken up to £500,000. This only works if the person’s main residence “is left to descendants”.

Martin explained: “This could be biological, foster, step or adopted children or grandchildren. It only applies if your total wealth is not worth more than £2 million.” The financial guru added that Britons can combine these tips to make a super savings allowance that will be completely tax-free, but once again requires a couple to be legally married or in a civil partnership.

He explained: “You can transfer unused allowance to your spouse, remarried or civil partner. If you leave them all they can, then leave £1 million to their descendants, £500,000 including the main residence and £500,000 including the main residence.”

Finally, the BBC star concluded that those who are still at risk of the 40 per cent inheritance tax rate after using all these methods can use the ‘gift rules’ which give them a variety of options to was trying to get the property value under the caps before. they die.