With reports of the royal wedding dominating headlines this week, there is a strong focus on marriage across the press and the media. But experts are reminding Britons that while most people marry for love, tying the knot also enables couples to enjoy a number of significant tax advantages.
A report in The Express is urging individuals who are married – or due to get married – not to ignore such tax perks as the marriage allowance and Capital Gains Tax (CGT) transfers.
More importantly, it adds that families need to be aware of the Inheritance Tax (IHT) advantages of being married or in a civil partnership.
According to up-to-date figures from HM Revenue & Customs (HMRC), the Treasury collected a record-breaking £5.3 billion in IHT last year.
Across the media, reports suggest that more and more middle class families are losing out to the tax – which is why planning ahead appropriately and exploring ways of mitigating IHT is today more important than ever before.
In England and Wales, IHT is levied at a rate of 40 per cent on all estates valued at £325,000 or more.
However, married couples and civil partners are able to pass on their IHT allowance to their surviving spouse completely tax-free – which is just one of many ways such families can save money on IHT.
In April last year, new legislation known as the residence nil rate band (RNRB) was introduced which, as of April 2018, enables individuals to pass on an additional £125,000 in property value to direct lineal descendants tax-free, too.
The RNRB will increase in value each year and, by 2020, will be worth £175,000 for each individual – enabling them to pass on £500,000 tax-free when combined with the standard £325,000 allowance.
Under the rules governing IHT for married couples and civil partners, this means that couples will effectively be able to pass on a maximum of £1 million IHT-free by passing their allowance to their surviving spouse post-2020.
Couples who wish to take advantage of these rules – or any other ways of mitigating IHT – should seek specialist legal advice.