Getting married isn’t a trivial decision to make. It’s a lifelong commitment with many factors to consider, from whether your partner is the right fit for you to whether a marriage is financially feasible for both parties. Even with those financial considerations in mind, many people may not realize that there are also financial perks to getting married. Let’s look at the top four. Note that these are specific to marriages in the United Kingdom (so if you’re a local taxpayer, you’re welcome!). As always, you should check with a tax professional and financial planner with respect to how these guidelines might apply to your specific future plans.
1. Sharing assets is tax-free
Once you marry, you can transfer assets between yourself and your partner without a tax liability. Seeing as most asset transfers incur some sort of tax liability, this is definitely a wallet-saver. More specifically, being married allows you to take advantage of two sets of UK allowances.
For the 2021 and 2022 tax year, the UK’s Capital Gains Tax (CGT) allowance is £12,300. The current dividend allowance is £2,000. These allowances give you the liberty of making capital gains or dividend income from your investments without paying tax. As a married couple, you have a combined allowance of double these amounts – £24,600 for capital gains and £4,000 for dividend income. What’s more, if one partner pays a lower tax rate than the other, you may use this rule to reduce your tax bill on any gains you both make above your allowances. Let’s say you pay the higher tax rate and you transfer assets to your partner, who is a basic taxpayer. Any income from that asset will be taxed at the lower rate.
2. Pension benefits
Being married has financial benefits that extend into the long-run. Specifically, both private and state pensions. As you probably know, many pension schemes pass along benefits to the surviving partner upon the death of their spouse. Basically, a spouse can inherit part of their partner’s pension and receive extra payments from their partner’s pension contributions. The extra payments are handed out if your partner hasn’t yet built up the full basic state pension entitlement themselves. All these benefits can add up to substantial amounts of money, so be sure to have the relevant paperwork in order!
3. Inheritance tax savings
In the UK, there is no inheritance tax on inheritance left to a spouse. If you were to transfer anything to a non-married partner, the inheritance tax rate would be 40% on almost all assets over £325,000. According to the Shariah, however, you must distribute your wealth and cannot leave it all to a spouse. To ensure you have your inheritance organized as per Islamic law, you should consider dedicating some time to familiarizing yourself with the process of putting together a will.
4. Cheaper car insurance
Who wouldn’t want cheaper car insurance? If you’re looking for a way to get it, consider tying the knot. In the eyes of some car insurers, being married is a sign of responsibility and means you’re less risky to insure. As a result, you may enjoy lower insurance premiums. Studies have shown that married couples in their 30’s pay, on average, £200 less than singles.
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