Are you thinking of getting married this summer?

With Covid-19 restrictions eased for gatherings, many couples have resumed their postponed plans to get married this summer, and hopefully looking forward to getting away on honeymoon! For other couples still in a cohabiting partnership, it may well be worth considering getting married or formalising a civil partnership, not just because lockdown has made you realise how much you love each other, but the many financial advantages to both parties!

Property ownership

If you and your partner are a cohabiting couple, you will be treated differently to married couples or those in a civil partnership that own a home together. As a cohabiting couple, you’ll be treated as joint tenants, which means your partner’s share of the property will pass to you on death, or, you’ll be treated as tenants in common, which means if your partner dies, their share will be passed on in accordance with their will. However, if your partner doesn’t have a will, their share of the property will be passed on by the laws of intestacy – therefore, if you’re not married, you may find that your late partner’s relatives now own half your house.

Inheritance tax

If you live in England or Wales as a cohabiting couple, in the event of death, the surviving partner of will not have an automatic right to a share of the estate and there will be disadvantages when it comes to inheritance tax on anything that is passed to you in a will. Anything above the nil rate band of £325,000 passed between unmarried individuals may be subject to inheritance tax of 40% which would usually be due within six months of a death.

Whereas couples that are married, and those in civil partnerships can usually leave everything they own to their spouse without you then having to pay inheritance tax on it. Furthermore, if you are married or in a civil partnership you can inherit your partner’s unused nil rate band when they die, creating a potential nil rate band of £650,000 for you to use yourself allowing you to pass on more of your estate tax-free to your dependents or anyone else, should you die.

The marriage allowance

At LWA, we remind our clients about the marriage allowance each year, providing a summary of the amounts that can be claimed.

There are over 2 million couples in the UK still missing out on this tax break, which was introduced in April 2015, for people born on or after 6 April 1935, ensuring low earners could benefit. It lets a spouse or civil partner, who earns less than their £12,500 personal tax allowance (therefore a non-taxpayer), to transfer 10% of their personal allowance to their spouse – only if the partner is a basic rate (20%) taxpayer, earning less than £50,000 (as this does not apply to higher rate taxpayers).

If you’re eligible for the marriage allowance, you can backdate your claim for up to 4 years provided you’ve met the criteria for this time, meaning you could claim up to a total of £1,187 – take a look at our Marriage Allowance blog for the tax year 2020/2021.

So, if you’re thinking of tying the knot this summer, we hope our blog has provided some additional positive points to consider! If you have any queries about any of the tax breaks mentioned above, or if you need advice on any other personal tax matters, please contact a member of our helpful team in Manchester on 0161 905 1801 or in Warrington on 01925 830 830 – we’re here to help.

 

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