Today is Valentine’s Day and for many around the world, it is a special time to show their love and affection for others. Some might even be planning on getting down on one knee to propose to their significant other.
For those thinking about getting engaged, Trusha Shah, Tax Manager at HW Fisher outlines four tax benefits that can make getting married beneficial for both spouses, and those in civil partnerships.
Trusha says: “While it might not be the most romantic reason to tie the knot, the reality is that marriage and civil partnerships come with some financial perks.”
1. Marriage Allowance
Eligible married couples, or those in a civil partnership, can transfer up to £1,260 of their personal allowance to their spouse or civil partner. This has the potential to reduce your tax bill by up to £252 in the tax year.
To benefit as a couple, you (as the lower earner) must normally have an income below your Personal Allowance – usually £12,570. You can calculate how much you could save using HMRC’s online calculator.
Remember, you cannot claim Marriage Allowance if you are not married or in a civil partnership, even if you are living together. Marriage allowance can also be claimed by individuals living abroad who are entitled to UK personal allowances.
2. Wedding gifts
Each parent can gift you up to £5,000 as a wedding gift without facing any tax implications. For grandparents, the tax-free amount is £2,500 each. This can also be applied to civil partnerships.
3. Inheritance Tax
If you’re married and your partner passes away, the surviving spouse will not be required to pay Inheritance Tax (IHT) on their partner’s assets.
You will also inherit your spouse’s unused IHT allowance, which can potentially double your IHT allowance if you plan to pass on your assets to your children when you pass away.
4. Capital Gains Tax
If you are married, you can be exempt from Capital Gains Tax (CGT) on transfers between spouses. This means, it is possible to transfer assets between each other to maximise your partners tax free allowance. However, the transfer must be a genuine gift, and it cannot be reversed in the case of divorce.
To find out more about individual circumstances, please get in touch with our tax team.
We’d love to hear from you. To book an appointment or to find out more about our services:
