Marriage or a civil partnership can offer significant financial benefits. Here are five tax strategies that can help couples maximise their finances:
1. Use Marriage Allowance to Transfer Personal Allowance
If one partner earns less than £12,570 and doesn’t fully use their personal allowance, they can transfer up to £1,260 to the higher earner. This increases the higher earner’s tax-free income to £13,830, saving the couple up to £252 annually. To qualify, both must be basic-rate taxpayers.
2. Claim Child Benefits (if applicable)
Child benefits can provide up to £17,000 over the course of your child’s life until age 16. Although the benefit reduces if either partner earns more than £50,000 and is eliminated at £60,000, it can still offer advantages such as National Insurance credits, which can be important for state pension entitlements.
3. Transfer Assets to Maximise Capital Gains Tax Allowance
Transferring assets between spouses or civil partners can help you use both of your Capital Gains Tax (CGT) exemptions. With the CGT annual allowance reduced to £6,000 in 2023/24 (and dropping to £3,000 in 2024), transferring assets allows couples to reduce their tax liability when disposing of investments like shares.
4. Share Dividends for Lower Tax Rates
If you own a limited company, making your partner a shareholder allows you to utilise both dividend allowances. Dividends are taxed at a lower rate than income tax, helping reduce the overall tax burden while increasing household income.
5. Pass Your Estate Tax-Free
Passing your estate to your spouse or civil partner is inheritance tax-free. You can also transfer any unused inheritance tax allowance, allowing your partner to pass on up to £650,000 tax-free. This can increase to £1 million if leaving a main residence to children or grandchildren.
These strategies can help you and your partner manage taxes more effectively and preserve wealth
