Getting married is a momentous occasion filled with love, commitment, and, believe it or not, potential tax benefits! While financial considerations shouldn’t be the primary driver for marriage, understanding the available tax breaks can be helpful for couples planning their future together.
This guide explores the tax benefits associated with marriage in the UK, focusing on clarity and user-friendliness. Let’s delve into what might apply to you:
Marriage Allowance: Sharing the Savings
The Marriage Allowance allows married couples and civil partners to transfer a portion of their unused Personal Allowance to their spouse or partner. This can result in a tax saving of up to £252 per year. Here’s how it works:
- Eligibility: Both partners must be married or in a civil partnership, and one partner must earn below their Personal Allowance (currently £12,570 for the 2023/24 tax year). The other partner must pay income tax at the basic rate (between £12,571 and £50,270 before Marriage Allowance).
- Transferring the Allowance: The partner with the unused allowance can transfer up to £1,260 to their spouse/partner, effectively increasing their tax-free income. This reduces their tax bill by up to £252 annually.
- Application: Claims can be made online, by phone, or through your tax return. You can even backdate the claim for up to 4 tax years (potentially saving up to £990)!
Example: Sarah earns £10,000, while Mark earns £30,000. Sarah has £2,570 of unused Personal Allowance. By transferring this to Mark, his tax bill reduces by £252, saving the couple money overall.
Married Couple’s Allowance: For Those Born Before 1935
This allowance applies to married couples and civil partners where one partner was born before 6 April 1935. It allows the transfer of additional tax relief, potentially reducing the tax bill by between £401 and £1,037.50 per year.
Eligibility: Both partners must be married or in a civil partnership, and one partner must have been born before 6 April 1935. You must also be living together as a couple.
- Calculation: The relief amount depends on the income of the younger partner.
- Claiming: You can claim this allowance through your tax return.
Note: If you married after 5 December 2005, the Marriage Allowance might be a more beneficial option, depending on your circumstances.
Other Potential Tax Benefits
Beyond the above allowances, marriage can offer other tax benefits in specific situations:
- Inheritance Tax: Spouses and civil partners are generally exempt from Inheritance Tax on assets left to each other. This can provide significant savings when dealing with larger estates.
- Capital Gains Tax: Spouses and civil partners can transfer assets between themselves without triggering Capital Gains Tax charges. This allows for strategic asset management and tax optimisation.
- Joint Tax Returns: While not specific to marriage, couples can sometimes benefit from filing joint tax returns, depending on their income and circumstances.
Important Points to Remember
- Tax rules and regulations can be complex. While this guide provides a general overview, it’s essential to consult with a qualified tax advisor Bryan and Spencer Associates for personalised advice based on your specific circumstances.
- Tax benefits shouldn’t be the sole reason for marriage. Marriage is a significant life decision with numerous emotional and legal implications beyond finances.
- Eligibility criteria and tax brackets may change over time, so staying updated on the latest regulations is crucial.
Conclusion
Understanding the tax benefits of marriage in the UK can help couples make informed financial decisions. However, it’s crucial to approach this information with caution and prioritize genuine marital commitment over solely financial considerations. Remember, while tax savings can be a bonus, a happy and fulfilling marriage is the true treasure.