Can Marriage Be Taxing?
OK, so the title is a poor play on words, but understanding the tax implications of marriage can prove very important.
Proposed tax break
I am a civil celebrant, not a tax expert, but I think I have my facts right. A new marriage tax break is on its way in, but actually it will only really benefit couples if one is a 20% tax payer and the other is bringing in less than £9,250 a year. Even then, the benefit will amount to only £150. So don’t rely on this to reimburse you for the wedding expenses!
However, there are other ways where it can be financially advantageous to be married.
Inheritance tax
This tax is charged on estates worth £325,000 or more. If you are married, or in a civil partnership, all assets can be passed wholly and freely to the surviving partner.
When the second partner dies, the allowances for each of them apply (together), so heirs can receive £650,000 before the tax comes into force.
Income tax
Income tax paid on savings, investments or a rental property can be reduced, if one spouse pays a lower rate of tax than the other. So assets can be switched, so that the lower-earner owns them (as long as the interest concerned is not more than the personal allowance).
Note that this is not permitted for unmarried couples.
Capital gains tax
If you are selling assets (eg funds, shares, property), each of you is taxed on any gain over £10,900. A couple can realise gains of £21,800 before the tax is applied.
Pensions
If married, you can inherit any final salary pension that your spouse earned. (This does not apply, if you are merely co-habiting.) Civil partners have the same rights as married spouses, incidentally.
Conclusion
I acknowledge that this may not have been the most riveting blog I have ever written, but I believe it addresses an important area, and I hope that anyone who has remained awake thus far will have gained something from it!
Michael Gordon can help prepare and conduct a tailor-made civil ceremony in or around London or, indeed, in Europe.