What the cohabitation consultation means for your finances

Key takeaways

• The government launched a consultation on 5 June 2026 that could give cohabiting couples significant new financial protections
• There are currently 3.5 million cohabiting couple families in the UK - the fastest-growing household type
• Any new legislation is unlikely before 2028, meaning current rules apply in the meantime
• Under current law, unmarried partners have no automatic inheritance rights and limited property rights, regardless of how long they've been together
• The most important financial steps cohabiting couples can take right now don't require waiting for the law to change
• Getting on the same page financially as a couple, from shared budgets to big purchases, is one of the most practical things you can do
  
  

What is the cohabitation consultation?

On 5 June 2026, the UK government launched a long-awaited consultation on the financial rights of cohabiting couples. The proposals would give unmarried partners who have lived together for at least three years, or who share a child, access to new financial protections if the relationship ends, as well as automatic inheritance rights if a partner dies without a will.

It's a significant moment. Cohabiting couples are the fastest-growing family type in the UK. According to the Office for National Statistics, the number of cohabiting couple families rose from 3.2 million in 2024 to 3.5 million in 2025 - representing 17% of all UK households. Yet the legal framework governing their finances has barely changed in decades.

The consultation covers three areas: financial protections on separation, inheritance rights for bereaved partners, and financial remedies on divorce and dissolution.

What does current law actually mean for cohabiting couples?

A widespread myth, sometimes called "common law marriage", holds that couples who live together long enough acquire the same legal rights as married couples. In England and Wales, this is simply not true. No matter how long you have lived together, cohabiting couples have no automatic legal status and very limited financial protection. In practical terms, this means:

If you separate: Unless you jointly own property or have a formal agreement in place, you may have no legal claim to assets in your partner's name - even if you contributed to them financially or gave up work to raise children.

If your partner dies without a will: You are not automatically entitled to anything, regardless of how long you were together. The intestacy rules that determine who inherits when there is no will do not recognise unmarried partners. Their estate would pass to other family members instead.

Pensions: Most workplace pension schemes pay out to a spouse automatically. For unmarried partners, there are no guarantees - it typically depends on whether a nomination form has been completed.

None of this reflects how most cohabiting couples think their situation works. A significant proportion of couples living together mistakenly believe they are legally protected in ways they are not.

What could change and when?

The consultation proposes giving cohabiting couples a distinct set of rights - not the same as marriage, but meaningfully stronger than what currently exists. The key proposals include financial claims on separation for eligible couples, automatic inheritance rights for bereaved partners, and stronger protections for the financially weaker partner, often the primary caregiver.

The important caveat is timing. The consultation itself runs until August 2026. After that, the government must consider responses before finalising policy, and any resulting legislation must pass through Parliament. Realistic estimates put any new law taking effect no earlier than 2028.

That means the current rules, not the proposed new ones, apply to every cohabiting couple in the UK today. If your relationship ended tomorrow, the new protections would not yet be in place.

This matters not because relationships are expected to end, but because financial planning is about being prepared for every possibility - not just the ones you expect.

Practical financial steps to take now

Because the law hasn't changed yet, the protection available to cohabiting couples today comes from taking practical steps yourselves. These are the most important ones.

Managing money as a couple: the basics

Beyond the legal steps, getting on the same page financially is one of the most practical and positive things a cohabiting couple can do - whether you've just moved in together or have been sharing a home for years.

Have the money conversation. Many couples avoid talking openly about money - incomes, debts, savings, and financial goals. But financial incompatibility is consistently cited as one of the leading causes of relationship breakdown. Being honest about where you each stand, and what you're working towards together, makes joint financial decisions significantly easier.

Agree how to split shared costs. There's no single right answer to how couples split bills and shared expenses - some go 50/50, others split proportionally to income, others maintain separate finances entirely. What matters is that the arrangement is agreed, understood, and feels fair to both people.

Build a shared financial goal. Whether it's a holiday, a home improvement, a new car, or building an emergency fund, having a shared financial goal gives a couple's money management a sense of purpose and direction. It's also a useful test of whether you're aligned on the bigger financial picture.

Planning big purchases together

Moving in together, or deepening a shared life, often comes with a list of significant purchases. Furnishing a home, upgrading appliances, making improvements to a rented or owned property, or buying a car for shared use. These costs add up quickly and can catch couples off guard if they haven't planned for them. A few principles that help:

• Agree on the budget before you browse. It sounds obvious, but many financial disagreements between couples start when one partner has already mentally committed to a price point the other hasn't agreed to. Setting the ceiling together first makes the conversation simpler.
• Be clear about who's paying for what. If one partner contributes significantly more to a shared purchase, particularly one connected to a property, it's worth recording this, especially in light of the current legal position for cohabiting couples.
• Consider spreading the cost of larger purchases. For significant planned expenditure - a kitchen upgrade, new furniture, a home improvement project - spreading the cost in fixed monthly instalments can make a big outlay far more manageable without depleting savings that might be needed for something else. A fixed-rate personal loan gives you a predictable monthly repayment from day one, making it straightforward to factor into a shared household budget.