Valentines Tax Benefits! – Saying ‘I do’
As couples around the UK are preparing for Valentine’s Day, those considering if it is the right time to pop the question, the ICAEW says that although it may not be the most romantic season to either propose, get married or enter a civil partnership it could have tax benefits.
For example, wedding presents from the friends and family to the couple can be tax effective! Parents can gift up to £5,000 and grandparents up to £2,500, without tax implications.
The newly- married couple could also be eligible to claim the marriage allowance to minimise their income tax bill. However, to qualify the partners can’t be high rate taxpayers, and the partner earning less must have income below the personal allowance, which is currently £11,850. Additionally, the partners must not be eligible for the married couple’s allowance, which is currently available to some older people.
If the couple are eligible, the marriage allowance permits one partner to transfer up to 10% of their personal allowance to their husband, wife or civil partner, which in tax year 2018/19 can decrease their tax liability by up to £238.
Additionally, ICAEW states that a marriage generates more of a ‘fluid’ environment for Capital Gains Tax and Inheritance Tax, which allows the couple to pass ownership of assets between them free of CGT and IHT, this is regardless of the amount.
Moreover, the standard rate of IHT is 40% on estates that are worth more than £325,000, an individual can pass on their estate to their surviving spouse which is completely tax free! Regardless of the amount. It can also be possible for up to £650,000 to be passed on to family and friends tax-free when the surviving spouse passes away.