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5 Financial Benefits To Marriage

Kit Klarenberg
Written By:
Kit Klarenberg

Pessimists say marriage is the worst financial mistake some people can ever make, but usually only when it falls apart. In the meantime, there are many financial advantages of marriage. Here’s a guide to just a few:

Downsized Duty

Two years ago, the UK government announced that it would introduce marriage tax allowances. The break, which is due to be introduced in April 2015, will allow married couples to transfer up to £1,000 of their personal income tax allowance to their partner.

To see whether you qualify, please visit the Your Money guide.

Coverage Cuts

When you’re married, you can make big savings on your insurance premiums. Of course, factors such as your age, geographical location, income and health still have a greater bearing on determining how much your insurance costs than your marital status, but having a spouse can trim pounds off your premiums.

This is because couples and families tend to make fewer, and less expensive, claims than policyholders who are single. Households with more than one car make fewer trips per vehicle, and families with children are less likely to be on the road late at night, when accident rates spike.

Investment Incentives

If you don’t qualify for a marriage tax allowance, you may be able to exploit capital gains tax (CGT) rules that favour those who are married.

CGT is payable at the rate of 18 per cent, or 28 per cent if your income pushes you into the higher rate tax band, on any profits you make in excess of the annual allowance (£11,100 in 2015/16). This applies to items you sell, but also to ones you give away.

Married couples and civil partners, however, can transfer assets to each other without triggering a CGT bill – reduce tax liabilities as a result.

Pension Plusses

Pension rules have evolved progressively over time – in every sense. Today, many pension schemes recognise cohabiting partners, and civil partners, on much the same footing as spouses. However, there are still clear advantages to being married.

For instance, a spouse automatically qualifies for a widow’s pension if their partner dies; this isn’t an automatic right if a couple aren’t officially married.

This right is particularly advantageous if a married partner uses drawdown to access their pension. A pension fund can pass tax-free to anyone at all before retirement but, once income is being drawn from it, it will be subject to a tax charge of 55% on death – unless it passes to a surviving spouse or civil partner.

Inheritance Inducements

It’s unfortunate, but perhaps the biggest financial benefit of being married comes when a partner dies. Married couples and civil partners can circumvent inheritance tax obligations to a degree, by passing assets to each other without incurring a corresponding tax charge.

In addition, it’s possible to transfer a deceased partner’s nil rate band to the surviving spouse,  meaning IHT can be deferred entirely until the remaining partner passes away.

Your wedding can also reduce the size of others’ IHT liabilities, as gifts for weddings and civil partnerships are exempt from IHT.

To unlock these benefits, it is important to ensure there are appropriate wills in place. Currently, intestacy rules do recognise a surviving spouse – but, without a suitable will, there’s no guarantee they can inherit all of the deceased’s assets. For more information on effective estate planning, please visit the Your Money guide to writing a will.