When you’ve paid for the wedding and walked down the aisle, the fun doesn’t stop there. Once you are hitched, you’ll find there are several financial benefits to getting married. You and your partner can share assets, benefit from each other's salaries, access a marriage allowance in the UK, and receive various other tax benefits.
There are multiple advantages to being married in the UK, which for some comes as a pleasant surprise and for others, plays a key factor in their decision to move from a long term relationship to a marriage.
Here, we explain in detail the different financial benefits of being married in the UK and help you and your partner make the most of your married tax allowance and plan your financial future together using all your marriage tax benefits.
Financial Benefits for Married Couples
We’re going to assume here that no-one gets married purely for financial reasons! But if you're sure that you want to spend the rest of your life with your partner, then getting married can have several long-term financial benefits.
Unfortunately, you need first to navigate the cost of the wedding itself – research shows that the average UK wedding costs £17,300, which is a significant investment in your Big Day.
Of course, you can get married for next to nothing if you wish, with many people opting for a register office ceremony followed by a meal at home with close friends and family to save money. After all, not everyone needs or wants a fairytale white wedding.
So, this blog is for anyone who’s ever Googled “do married people pay less tax in the UK?” or “how does marriage allowance work?”. We will look at some of the married couples’ tax benefits and answer the question – what are the benefits of being married in the UK? – as you look to the future.
Sharing assets
One of the most significant financial benefits of being married is that couples are permitted to pass money between one another, which can positively impact the tax that you're both required to pay.
You can split your investments and savings between you, ensuring that the person with the lowest salary holds most of your assets. As an expert at Hargreaves Lansdown explains: "Any extra can be held by the lowest taxpayer, so you pay the absolute minimum in tax."
It's a good idea to hire an accountant to help you understand how to share assets effectively, but it can be a great way to offset some of the tax you and your partner would otherwise pay.
Marriage allowance
So what is marriage allowance? Put simply, it’s another one of the benefits of marriage in the UK, meaning that you can transfer up to £1,260 of your personal allowance to your husband, wife, or civil partner when it's time to submit your annual tax return.
This reduces your bill by up to £252 in the tax year, running from 6 April to 5 April. Again, it's worth hiring an accountant to help you and your partner understand the various benefits of the marriage allowance in the UK and check your marriage allowance claim, but knowing that such a programme exists is a good starting point.
Find out more about how to claim Marriage Allowance here.
Capital gains tax liability
Do you pay less tax if you are married in the UK? For some types of tax, yes. There are specific rules for capital gains tax on gifts or assets you give to your husband, wife, or civil partner. In most cases, you don't pay any capital gains tax on assets you give or sell to your partner, which can offer significant savings.
You are exempt if you sell to your partner and do not live together in the tax year or if you provided them with goods they then sold via a business. You can read up on married couples' capital gains tax here.
Inheritance tax
Capital gains tax reduction isn’t the only tax advantage of marriage in the UK, as inheritance tax is also affected. Married couples and people in civil partnerships can leave unlimited wealth to their spouse or civil partner without triggering an inheritance tax bill.
Moreover, a spouse can inherit their partner’s unused £325,000 tax-free allowance and £175,000 residence nil rate band.
These three things could make a massive difference to your finances and you can access them instantly as a benefit of marriage.
Jason Hollands, managing director at investment group Tilney Bestinvest, says: “When an individual makes a gift of capital/assets to another individual during their lifetime – perhaps a car or a high-value piece of jewellery – it may be classed as a potentially exempt transfer and, should death occur within seven years from the date of the gift, the beneficiary may be liable to inheritance tax."
“However, gifts between spouses or civil partners are not potentially exempt transfers – they're ignored for inheritance tax purposes altogether."
The last thing you want is to leave anyone with a significant tax bill when you're gone, and getting married is an effective way of ensuring that you can leave money with your spouse that HMRC cannot touch.
Bereavement protection
Nobody likes to think about death as it's a complicated topic to bridge, particularly if you're still young. In the UK, if you die without a will, your spouse or civil partner will receive your entire estate. If you have children, your spouse gets the first £270,000, while any children receive the rest.
Crucially, however, if you are not married to your spouse and die without a will, the surviving partner has no automatic right to any inheritance from your estate. This can cause stress and anxiety for your partner after your death, and there are no financial assurances that they will be able to access any of your wealth.
Another benefit of being married is that your spouse can receive a bereavement support payment of up to £3,500 following your death, as well as £350 per month for 18 months after that if you are a parent of a child under the age of 18.
Presently, the government does not award this to unmarried cohabiting couples, so there are real benefits for getting married.
Financial Benefits for Married Parents
In the UK, a mother has parental responsibility for her child from birth, a key legal distinction. A father is legally responsible for his child if he is married to the mother and listed on the birth certificate. However, for unmarried couples, things are slightly different. An unmarried father can get parental responsibility for his child by jointly registering the birth, getting parental responsibility from an agreement with the mother, or through a court order.
This is important to think about. If you are not married, only the mother is legally financially responsible for the child, which can cause significant issues for you and your child’s future. Married parents share the responsibility of raising children, both financially and emotionally.So, if you and your partner are planning to bring a child into the world, it makes sense to get married beforehand to ensure that you are both legally and financially responsible for your baby.
So what are the financial benefits of marriage in the UK?
The bottom line is that you should never get married solely for financial reasons. But there are several economic benefits of being married which are hard to ignore.
You and your partner can share assets and access a range of tax benefits that aren't available to unmarried couples. Getting married also has financial benefits for your children, as it offers them additional protection and support.
If you're having conversations with your partner about managing your money together, HyperJar is here to help you. Check out our Household Finance and Budgeting Templates blog to get your finances in order ahead of your big day and start planning your financial future together for added security.
Our app makes it easy to create jars for different parts of wedding planning, from the hen do to the honeymoon or the dress and the photographer. You can share these jars with other people who are making contributions, set targets and send messages and payment reminders to others in the jar. Getting married is a social occasion and HyperJar makes it easy to share the cost with others as well as schedule automatic payments to keep you on track.
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