Love is in the air

  • Posted by: Michael Winkelmann
Love is in the Air | Marriage Allowance | Inheritance Tax | Residence Allowance | ISA Allowance

14th February is Valentine’s Day and love and romance are the theme but don’t forget practicality.

Whilst even accountants don’t marry for tax purposes, there are tax advantages to be had alongside your marital bliss.

Marriage allowance

If one partner does not use all their personal tax allowance (£12,500 for 2019/20) then 10% of the balance can be transferred to the other spouse to reduce their tax bill

Married couple’s allowance

If one partner was born before 6 April 1935 it may be possible to claim a married couple’s allowance of up to £8,915 in 2019/20

Nil loss – nil gain

Assets can be transferred between husband and wife at no loss or gain. If you are thinking of disposing of a large item it may be worth transferring half of it into your partner’s name first in order to take advantage of their annual capital gains allowance (£12,000 for 2019/20) too

You might also want to transfer assets so that a spouse making a capital loss can offset this against a taxable gain

Inheritance tax

If the first partner dies without using all their inheritance tax allowance (currently £350,000) the balance can be used by the surviving partner to reduce any tax payable on their estate. Talking of inheritance, don’t forget to get your wills updated when you get married. Just in case.

Transferable main residence allowance

From 2019/20 there is a further £150,000 allowance each if your home is left to your children (including step children) or grandchildren when you die. This means that, between you, you can potentially leave £1,000,000  exempt of inheritance tax.

ISA Additional Permitted Subscription

Any ISAs inherited from your spouse can be reinvested into your own ISA without affecting your annual ISA allowance.

 

Whilst we would agree that none of these measures are a good enough reason to pop the question this Valentine’s Day they do make a nice added bonus.