Tag Archives: marriage allowance

Marriage Tax Breaks

Marriage Tax Breaks

For those who want to leap into marriage this year (according to an old Irish legend, women are allowed to propose to men on 29th February) there are some financial breaks for taking the plunge:

Marriage Allowance

You may be able to claim marriage allowance to allow you to transfer 10% or £1,060 of your Personal Allowance to your husband, wife or civil partner (in 2016/17 this rises to £1,100). This reduces their tax bill by up to £212 in the tax year. To be of benefit, you as the lower earner should have an income of £10,600 or less.

Capital Gains Tax (CGT)

A couple can pass ownership of assets between them free of tax (unless you separated or didn’t live together at all in that tax year).  And if you are selling assets that would attract CGT, you will be taxed on any gains over £11,100 in 2015/16 but as both spouses have a CGT exemption, assets may be transferred and shared so that effectively a couple can realise gains of £22,200 before CGT is due.

Marriage gifts

If family are feeling generous, there may be no inheritance tax on wedding or civil partnership gifts worth up to £5,000 for a child, £2,500 for a grandchild or great-grandchild and £1,000 to anyone else.  The gift must be given on or shortly before the date of the wedding or civil partnership ceremony.

Inheritance Tax (IHT)

Your estate is exempt from IHT if you left everything to your husband, wife or civil partner (who lives permanently in the UK).  Again married couples and civil partners can give any value of gifts to each other during their lifetime without IHT being due on them.

There are more benefits to being married than you may have thought so maybe consider taking that leap! For more information on any of the points in this article you can contact Clare Vaughan at clare.vaughan@kelsallsteele.co.uk or 01872 271655

Marriage Allowance

Marriage Allowance

For all of those romantics out there who thought the only reason to get married or enter into a civil partnership was for tax reasons, you are in luck.  Registration has now opened for the new Marriage Allowance; a government scheme which will allow some couples to share part of their annual income tax allowance, helping them to save up to £212 a year.

How does the new allowance work?

Couples made up of one non-taxpayer and one basic-rate taxpayer will be able to share some of the non-taxpayer’s unused annual income tax allowance.

In normal circumstances each year, individuals can earn up to a set amount each year without facing an income tax bill. The individual personal allowance for 2014/15 is £10,000, but will rise to £10,600 from April 2015.

Anyone who earns less than that amount (taking into account income from all sources) does not pay any income tax. Under the new scheme, they will be able to transfer up to £1,060 of their unused allowance to their spouse or civil partner as long as he or she is a basic-rate taxpayer. From April 2015, that will mean they qualify if they earn between £10,601 and £42,385 a year.

Can anyone qualify?

Anyone who was born on or after 6 April 1935 and is married (or in a civil partnership) can qualify, as long as they meet the rules on earnings. If one member of the marriage or civil partnership was born before 6 April 1935, they can claim the Married Couple’s Allowance instead.

How much will it save us?

The transfer of unused allowances could save up to £212 a year in the first year.

From April 2015, anything you earn between £10,601 and £42,385 a year will be taxed at 20%. If your spouse or partner earns £7,500 a year, they effectively have £2,500 of their allowance that they are not using. Of this, they can transfer the full £1,060. This increases your tax-free allowance to £11,660, and the 20% saving on that extra bit is equal to £212.

If your partner’s earnings are much closer to £10,600, they can still share the leftover bit of their allowance. Say they earn £10,000; they can give you the remaining £600. In this case you will save £120 a year.

When will we get our tax refund?

The reduction in your tax liability will be reflected every month in your pay packet. The partner who is receiving the allowance will have their tax code altered to reflect their larger personal allowance. If you are employed, you will have less of your earnings taken off you each month before you are paid.

Although you can register now, you don’t need to do so to get the benefit for the full year.

How do I register?

You can register your interest in Marriage Allowance on the HM Revenue & Customs website, HMRC will then get in touch to tell you when you can make a formal claim.

Unfortunately, couples who cohabit rather than are married or in a civil partnership miss out on the allowance, regardless of how much they earn or how long they have been together.