Marriage and civil partnerships offer financial advantages through strategic tax planning. By leveraging these 5 tax strategies, couples can optimise their finances and maximise tax savings:
1. Utilise Marriage Allowance: Couples with one partner earning under £12,570 can transfer up to £1,260 of their unused personal allowance to the higher earner, increasing the tax-free income allowance to £13,830. This can result in an additional £252 per year for the household.
2. Claim Child Benefits: Despite complexities, claiming child benefits can provide significant financial support, amounting to over £17,000 until the child turns 16. While repayment is necessary for high earners, benefits such as national insurance credits still make it an advantageous strategy.
3. Transfer Assets: Transferring valuable assets between spouses incurs no capital gains tax liability, allowing couples to utilise both parties’ annual capital gains tax exemption of £6,000 (from April 2023). Maximising this allowance through strategic asset transfers can lead to tax savings.
4. Shareholding: Making a spouse or partner a shareholder in a limited company enables the utilisation of two tax-free dividend allowances at a lower tax rate. This strategy is beneficial for extracting funds from the business and boosting income while minimising tax liabilities.
5. Inheritance Tax Planning: Passing on the estate to a spouse or partner is exempt from inheritance tax, allowing the transfer of unused allowances. This can result in a combined inheritance tax allowance of up to £650,000 or even £1 million if the residence nil rate band is utilised, providing significant tax savings for future generations.
By implementing these tax strategies, married couples and civil partners can effectively manage their finances, reduce tax liabilities, and secure their financial future. Discussing these strategies with a FKGB can help in making informed decisions and optimising tax benefits for the long term.
