Married couples (and civil partners) can do some things other couple cannot.
Here are some of the advantages:
Marriage Allowance – A spouse earning less than the Personal Allowance (£12,570 in the 2023/24 tax year) can transfer up to £1,260 of their unused Personal Allowance to their higher-earning partner, reducing their tax bill by up to £252 annually.
Inheritance Tax (IHT) Exemption – Assets left to a spouse or civil partner are exempt from Inheritance Tax, regardless of their value. Spouses can also transfer unused IHT allowances to the surviving partner.
Capital Gains Tax (CGT) Exemption – Transfers of assets between spouses or civil partners are exempt from Capital Gains Tax. This allows couples to share assets for tax planning purposes.
Pension Benefits – Some workplace pensions and private pensions offer spousal benefits, such as a surviving spouse being eligible for pension payments after the partner’s death.
Joint Property Ownership – Although the default is 50/50 for sharing of capital and income it is possible via election to allocate income differently.
State Pension Benefits – In certain cases, a lower-earning or non-earning spouse can use their partner’s National Insurance record to qualify for a higher State Pension.
Tax Relief for Charitable Donations – Married couples or civil partners can pool their tax allowances to maximize relief on charitable giving.
Simplified Tax Planning – Sharing assets between spouses can reduce exposure to higher tax rates and ensure more efficient use of tax allowances.
What it if all ends though? Well considering the first Monday back in the New Year is known as Divorce Day it is worth remembering that most of the perks of marriage only apply when living together as husband and wife! What does this mean in practice? Well things like the tax free transfer of assets has a limited shelf life meaning that divorce settlements get more complex after you separate because tax becomes an issue whereas it might not have been while living together. Moral of the story? Always the same! Seek advice!