Is it worth marrying for money ?
Most of us marry for love, but tying the knot still brings financial advantages too. It’s commonly believed that co-habitees have the same rights as married couples but in fact this isn’t the case.
The Government plans to introduce a married person’s tax break in April 2015. Rather than rewarding all married people with a higher tax allowance, the marriage transferable tax allowance will permit married couples and civil partners to transfer up to £1,050 of their personal allowance to their partner. This is only available where neither person is a higher rate tax payer.
Some married people already benefit from an income tax break. If either person was born before April 1935, they are entitled to the married couple’s allowance. The maximum allowance in tax year 2014/15 is £8,165.
There are Capital Gains Tax (CGT) advantages too. CGT is payable at 18%, or 28% if your income pushes you into the higher tax rate bands on gains you make in excess of the annual exempt amount (£11,000 in 2014/15). Married couples and civil partners can transfer assets to each other without triggering a CGT charge. This means they can take advantage of both their annul allowances to reduced tax liability.
When it comes to pensions, being married has advantages also. For example, although a spouse will be eligible for a widows/widowers pension, this isn’t automatically the case if the couple aren’t married. There are often conditions that typically require the couple to be financially dependent on each other and living as if married. They also need to be free to marry, so this would exclude anyone who wasn’t discovered from a previous spouse.
But where it’s particularly advantageous to be married or in a civil partnership is if your partner uses drawdown to access their pension. A pension fund can pass tax-free to anyone at all on death before retirement but, once income is being drawn from it, it will be subject to a tax charge on death unless it passes as pension income to a surviving spouse or civil partner.
Tax planning can be complicated; it’s always a good idea to seek professional advice