Married couples were once viewed as a single taxable unit by the government resulting in you being taxed less after getting married. However this is not the case anymore, now you are mostly taxed individually meaning very few tax benefits. Here are some important things to note that will affect your finances after marriage or a civil partnership:
Married couple’s allowance
Receiving married couples allowance could reduce your tax bill by between £326 and £844.50 a year. You are eligible to receive it if:
- you’re married or in a civil partnership
- you’re living with your spouse or civil partner
- one of you was born before 6 April 1935
As of the 6th April 2000 the married couple tax was not available for couples born after 1935
Marriage Allowance
If you were born after 1935 you could still receive a marriage allowance instead which was introduced in April 2015. This allows you to transfer £1150 of your personal allowance to your Husband, Wife or Civil Partner if they earn more than you. This results in their tax being reduced by £230 in the tax year. You can apply for Marriage allowance if:
- you’re married or in a civil partnership
- you don’t earn anything or your income is £11,500 or less
- your partner’s income is between £11,501 and £45,000 (or £43,000 if you’re in Scotland)
Tax Free Gifts
One of the greatest marriage tax benefits are tax free gifts. Any gifting between you or your spouse is tax free during your lifetime. You can leave any possessions and property to your spouse after you die and it will be tax free meaning the existing partner gets double the tax-free allowance for inheritance tax. Also your capital gains tax is effectively doubled, and your spouse can transfer assets between each other during your life time text free.
Will your savings be affected?
You can take advantage of less tax on your savings interest once you’re married providing one of you is in a different tax bracket to the other. For example if one of you is a basic rate tax-payer and the other does not pay tax you can keep all your savings in the name of the non tax payer so you both can enjoy tax free interest on it all. However the interest earned must not take them over the taxable income threshold.
You can apply the same rules if one of you is a higher rate tax-payer and the other is a basic rate. You can take advantage of the lower rate tax-payers rate of tax.
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