Shropshire couples who are planning to tie the knot this summer may be surprised to find the ceremony brings them unexpected tax benefits.
Francesca Hutcheson, Tax Director at Dyke Yaxley, said with the Royal Wedding just around the corner, wedding fever was reaching its peak.
“Surveys have shown that the average cost of a UK wedding is now more than £27,000 – although Prince Harry and Meghan Markle’s special day will undoubtedly cost a little bit more than the average day.
“But despite the initial outlay, couples may be surprised at the number of tax benefits a marriage or civil partnership brings.”
Francesca said the greatest tax advantage to being married was often the ability to pass on assets to your surviving spouse without worrying about Inheritance Tax.
“Inheritance Tax currently stands at 40% on estates worth over £325,000, so by passing your assets to your spouse you could achieve sizeable tax savings on investments and property.
“And when the second spouse dies, both partners’ allowances still count when you are passing on your assets to the next generation – in fact, from 2020, a change in the rules means that a married couple could leave up to £1 million to their children before any Inheritance Tax is applied.”
Another advantage of being married was that couples had the flexibility to arrange their finances to make sure they were as tax efficient as possible.
“You can transfer income-generating assets, free of tax, to the spouse who earns the least to make use of their Personal Allowance and Basic Rate banding – but if the couple were to separate, all assets owned by both partners would be part of any future divorce settlement.”
Married couples and civil partners can also register online for a tax allowance introduced in 2014, but only households on relatively low incomes are likely to benefit.
“While it may not seem very romantic to consider getting married for tax purposes, it’s clear that couples could be missing out on significant financial benefits by simply co-habiting rather than tying the knot. In fact, it has been widely reported that two single friends in Dublin got married last year simply to avoid paying Inheritance Tax should either of them die – so maybe it’s time to reconsider your plans?”
