plonkee money an english-er's thoughts on personal finance

July 8, 2008

husbands and wives – debts, taxes and responsibility

Filed under: credit and debt — Tags: , , , — plonkee @ 1:31 pm

I was inspired by Mrs. Micah’s post on whether, in America, husbands and wives are responsible for the other parties debts. It looks like in the States, a married couple is jointly responsibly for each other’s debts if they were acquired (without fraud) after marriage. I figured that the law in the UK would be slightly different, and it is.

In England and Wales liability for debts is independent of a couple’s married or unmarried status. You are no more responsible for your husband’s debts –whenever they occurred – than you are for anybody elses. And of course, the same is true for your wife’s debts.

However, you are both liable for any joint debts. In particular if you take out a debt agreement with joint and several liability then not only are you jointly responsible for the debt, but if one of you disappears then the other is responsible for the whole debt. I suspect that many joint debt agreements are of this form.

Similarly husbands and wives are taxed independently – a fact that you can and should use to your advantage. Each has separate personal tax-free allowances, and separate ISA allowances.

There are some things that change if you get married. Inheritance law makes provision for husbands and wives but not for unmarried partners. Pensions may provide benefits for surviving husbands or wives, but not necessarily for partners. An unmarried couple is also treated differently in adoption law. Some of these differences can be overcome with a little work (e.g. creating a will), and others cannot (pension rights).

An important thing to remember is that there’s no such thing as a common law spouse in England. It doesn’t matter how long you’ve lived with someone, you don’t automatically get any rights.

Note that throughout I’ve referred to husbands and wives. The same rules apply to same sex marriages, which are called civil partnerships in British law. This is not a definitive explanation of the legal positions involved – always do your own research, plonkee money is provided for entertainment purposes only.

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