- Wedding gifts to the happy couple from friends and family can be tax effective. Parents can each gift up to £5,000, and grandparents up to £2,500, without facing any tax implications (normally inheritance tax can apply to gifts if the donor doesn’t survive the gift by 7 years).
- The newly-married pair may also be able to claim the marriage allowance to reduce their income tax bill. To qualify neither of the partners can be higher rate taxpayers, and the lower earner must have income below the personal allowance, currently £11,850. In addition the couple must not be eligible for the married couples allowance, which is available to some older people.
If eligible, the marriage allowance allows one partner to transfer up to 10% of their personal allowance to their husband, wife or civil partner which, in tax year 2018/19, can reduce their tax liability by up to £238.
- A married couple can transfer shares between them and be taxed on their resepective dividends.
- A marriage creates more of a ‘fluid’ environment for capital gains tax (CGT) and inheritance tax (IHT), allowing the couple to pass ownership of assets between them free of CGT and IHT, regardless of the amount.
While the standard rate of IHT is 40% on estates worth more than £325,000, an individual can pass on their estate to their surviving spouse completely tax free, regardless of the amount. When the surviving spouse dies it can be possible for up to £650,000 to be passed on to family and friends tax-free.