Love is in the air… Should we get married for tax reasons?

It may not be the most romantic reason for tying the knot amid the beautiful Marlow countryside or the Oxford spires, however marriage can offer significant financial protection. 

Can being married reduce our Inheritance tax (IHT) bill?

Simply being married at the time of your death can reduce your exposure to inheritance tax as spouses can transfer any unused inheritance tax allowances to each other upon death. This means the surviving spouse can potentially inherit up to twice the individual tax-free allowance, and twice the allowance available against the value of a house, significantly reducing the overall tax liability on the estate.  Additionally, spouses can transfer unlimited personal possessions between them on death, without paying any tax.

Does this equally apply to civil partners?

Civil partners benefit from the same inheritance tax allowances as married couples.  So they can transfer unlimited assets between them tax-free, and any unused inheritance tax allowances can be transferred to the surviving partner.

We are “common law” spouses, doesn’t that mean something in law?

Couples may have been together for many years and the outside world may consider them to be married, however unless you have a certificate, you will not receive any of the above benefits under current law when one of you dies.  The survivor of a cohabiting couple who were not married or in a civil partnership could face an inheritance tax bill after the first death which is much larger than it would have been, had they been married.  This means there is much less available for the survivor, and any children, and assets may need to be sold to cover the tax. 

So let’s do it!

It goes without saying that getting married or entering into a civil partnership is a serious decision which should not be taken lightly.  Although the inheritance tax benefits are significant, marriage and civil partnerships are legal contracts with other implications. If the relationship breaks down, divorce or dissolution can be time-consuming and costly, putting both partners and the rest of the family under strain.  However, for long-established couples, marriage or civil partnership can provide protection and peace of mind for the future.  Ultimately, you should consider your decision carefully, and professional advice may be necessary.

Who can I ask for help?

If you are in Marlow or Oxfordshire, our team of experienced solicitors can help you. 

For more information please contact our legal advisor Bethan Chant.