Not every marriage in every country is recognised legally under English law. For a start, the marriage must be legally binding under the law of the country in which it takes place. For example, in Spain one of the couple must be a Spanish national or have been resident in Spain for two years under local law, and in Turkey religious ceremonies are not legally recognised, only civil ceremonies. Couples marrying abroad may therefore need to arrange a civil ceremony in the UK for the marriage to be recognised back home.
We were reminded of these principles recently, when the Court of Appeal overturned a High Court judgement. It ruled that Nasreen Akhter and Mohammed Shabaz Khan, the couple at the centre of an Islamic divorce case, although married under sharia law, were never legally married under English law.
The couple had married in an Islamic Nikah ceremony in a London restaurant in 1998, but never followed this up with a civil ceremony. Although this was not a tax case, this ruling could have significant tax implications for numerous couples.
Whilst certain aspects of the UK tax and benefits system, such as tax credits, universal credit and the high income child benefit tax charge operate for 'couples', which includes married couples, those in a civil partnership and those living together as if they were married, many others are specific for those who are legally married or in a civil partnership or similar legally recognised relationship. These include provisions for income tax, capital gains tax and inheritance tax.
The marriage allowance, introduced in 2015, allows spouses (or civil partners) to transfer part of their personal allowance, if it is otherwise not all used (subject to income restrictions), generating an income tax saving of up to £250. This only applies to married couples, not those co-habiting.
The implications can be far greater. Take the situation in which a person dies, leaving their chargeable estate valued at £1m to their widow. No inheritance tax is due on the basis that an inter-spouse transfer is specifically exempt. If the same death and transfer arose outside a marriage recognised in the UK, the tax liability might typically be £270,000, after taking account of the standard nil-rate band. Spouses can also transfer assets between themselves during their lifetimes without incurring a capital gains tax charge.
Couples who believe they benefit from these tax advantages through marriage, but whose marriage took place abroad or in a religious ceremony that is not recognised under UK law (such as sharia law) , may get an unwelcome and costly surprise on death or divorce. This can come at what is already a very difficult time.