Financial Benefits of Marriage

Ask the Expert

“My partner and I have been together for nearly 20 years, but we are not married. We are hoping to retire in the next couple of years – would we benefit financially by getting married?”

Carl responds:

Marriage can certainly provide financial advantages for a couple as there are various rules and allowances available to couples who are married or in a civil partnership.

As a married couple, you can share investments and savings, which means that you can both use your personal allowances for income and capital gains tax to pay as little tax as possible.

You may also benefit from an Income Tax benefit; if one of you is a basic rate taxpayer and the other is a non-taxpayer, the non-taxpayer can transfer 10% of their Personal Allowance to the basic rate taxpayer. Consequently, this could reduce the overall amount of tax that you pay as a couple – this is known as the Marriage Allowance.

Married couples can leave unlimited wealth to their spouse without triggering an inheritance tax (IHT) bill. Furthermore, if any IHT allowance (the standard Nil Rate Band and the Residence Nil Rate Band) is unused when your spouse dies, the remainder can be passed to you – potentially doubling your Nil Rate Band. This could give you a potential Nil Rate Band of up to £1m. However, the actual exemption will depend on a variety of factors, such as your family circumstances and the size of your estate.

If you have ISAs in your estate, the surviving partner will benefit from a one-off additional allowance that can be claimed to the value of the deceased partner’s ISA holdings.

Finally, I would recommend checking your pension as some pension death benefits can be left to other heirs, whereas other pension schemes limit death benefits to a spouse or civil partner.

If you do not want to get married, there are ways to ensure that you suffer less financially. For example, you and your partner must keep your wills up to date so that any unexpected tragedy does not lead to a partner being disinherited. You also have the option to fill out an ‘Expression of Wishes’ form so that your pension goes to your partner when you die.

Before making any life-changing decisions, I suggest that you seek independent financial advice to evaluate the financial benefits of marriage.

Any opinions expressed do not constitute advice. References to taxation are based on our understanding of current legislation and HMRC practice, both of which may change.