For Richer, For Poorer

With Covid-19 restrictions behind us (hopefully), the UK is seeing a boom in weddings, I myself got married a month ago.

But what are the benefits of getting married in relation to financial planning?

Marriage allowance

A proportion of an individual’s personal allowance (£1,260) can be transferred to a spouse or civil partner (as long as neither are higher or additional rate tax payers). This is beneficial where one spouse’s income is less that the personal allowance (£12,570) and can save up to £252 in income tax per annum.

What’s mine is yours

Assets can be transferred between spouses with no capital gains tax (CGT) payable. This means assets can be transferred in order to use a spouse’s CGT allowance (currently £12,300 pa) or to utilize a lower rate tax band.

Till death do us part

Whilst this is probably not at the forefront of your mind when you think of marriage, this is the area which offers the greatest financial benefit:

• There are greater inheritance tax (IHT) exemptions for wedding gifts. Parents can gift up to £5,000 each, grandparents £2,500 and an individual up to £1,000 with no IHT implications.
• An unlimited amount can be transferred to a spouse (UK domiciled) upon death with no IHT payable.
• Any unused nil rate band (£325,000) and the residence nil rate band (£175,000) can be inherited by the surviving spouse (only one can be inherited).
• When an individual dies, their ISA loses it’s tax efficient wrapper. However, a spouse or civil partner can benefit from an additional ISA allowance (up to the value of the deceased spouse’s ISA upon death) without this counting towards the normal subscription allowance.
• If you are married (or in a civil partnership) and hold no valid will, intestacy dictates that you inherit the whole estate from your spouse (or civil partner). If you also have children, you inherit the first £270,000, your spouse’s personal property plus half of the remainder (In England and Wales).
• When your spouse or civil partner dies, you are entitled to bereavement support payments (£2,500 plus 18 monthly payments of £100 or £3,500 followed by 18 monthly payments of £350 if you have a child under 16 or a child under 20 and in full time education), assuming your spouse has paid national insurance contributions for at least 25 weeks in a tax year since 1975 and you are under state pension age.

In sickness and in health

True wealth is measured in time, relationships and experiences and studies show that married people live healthier, longer lives than singletons and cohabitators!