The tax advantages of getting married
Marriage or civil partnerships, in the eyes of the law makes a large difference to a couple’s financial status. If you just live together, you could lose out on inheritance tax mitigation strategies, even if you have been partners for a long period of time. The only advantage that you could get if you are not married or in a civil partnership is you can claim one property each as your main residence. This means that on the sale of a second property there would be no capital gains tax applied as the second property could be classified as a main residence. Some of the tax advantages of getting married are as follows.
Marriage or civil partnerships become important in the probable event that one of you passes first. If all of the assets pass on to your spouse or civil partner it will be free of IHT. In addition, they will take any unused portion of the nil rate band for future use. This wouldn’t apply if you aren’t married or in a civil partnership. In an example, radio one presenter Steve Hewlett married his partner Rachael as he was terminally ill so that all of his assets would pass on to her free of any inheritance tax charges.
If you do not have a will and are married or in a civil partnership, then your partner would automatically receive some of your estate, but if you aren’t then they would not automatically receive any assets. It will skip your unmarried partner and will follow the rules of intestacy, which will pass the assets to your family according to certain rules.
Other benefits of being married or being in a civil partnership include being able to make lifetime gifts to your partner without IHT or capital gains tax, making it the easiest way for assets to be arranged in the most tax effective way. On the occasion of a wedding cash gifts can be given up to £1,000 per person as well as being able to give gifts of up to £5,000 to your children and £2,500 to your grandchildren without the worry of IHT.
You also have the ability to easily claim against your married partners will if they haven’t made reasonable financial provision for you in the will, as you won’t have to prove your relationship has lasted for more than 2 years or financial dependence from your partner. If you aren’t married then you will be struck by the disadvantages of inheritance taxation.
Although there are many ways around getting around inheritance tax if you are not married, it is easier and more cost efficient if you are and your family would benefit more after death from it. These are just some of the tax advantages of getting married.
For any advice regarding this matter, do not hesitate to contact our experienced financial advisers.