Are there any financial benefits to being married?
Q: I would be very grateful if you could let me know what the monetary advantages or disadvantages are of co-habiting rather than being married.
My partner and I are very happy and do not particularly want to spend the time or money arranging a wedding unless, quite frankly, it would be financially benefi cial to do so.
We have both made wills and we own our property as 'tenants in common' so, apart from the inheritance tax issue, are there any other financial disadvantages to living together in a 'common law' relationship?
A: Steve Theaker is a senior tax partner at accountancy firm UHY Peacheys
There can be some tax advantages to being married. In terms of capital gains tax, transfers of assets between married couples do not count.
The spouse receiving the asset is regarded as acquiring it at their spouse's original acquisition cost - so there are no capital gains to be taxed (CGT). This gives married couples the opportunity to transfer assets between themselves before they sell anything to take advantage of both annual CGT allowances - £10,600 each.
Also assets you own that pay an income can be transferred between spouses to maximise both spouses' personal income tax allowances and basic-rate tax bands.
For inheritance tax (IHT) purposes, there can be advantages too. Everybody gets an IHT-free allowance of £325,000 - you can pass on this value of assets or cash without facing a tax bill. Transfers of an estate between spouses on the death of one partner are ignored and any unused tax allowance can also be transferred to the surviving spouse.
This means that if all the first spouse's estate is left to the surviving spouse, there will be two nil-rate bands available when the second spouse dies – at present this means the surviving spouse can pass on up to £650,000 worth of assets upon their death without being liable for IHT.
As you can see, there are some definite tax advantages to being married. So it may be worth nipping down to the registry office and filling out the forms – after all, a wedding doesn't have to be an extravagant affair.
