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What are the financial benefits of getting married? From inheritance tax to pensions and bereavement support

It’s not the most romantic reason for a proposal, but there are many financial and practical reasons why it can make sense to be joined together by law

Thousands of weddings and civil partnerships were delayed last year due to the coronavirus pandemic, as the various lockdowns placed severe restrictions on ceremonies.

Meanwhile people’s plans for celebrations in 2021 are still looking uncertain, with ceremonies only allowed to take place in exceptional circumstances and receptions banned across all parts of the UK.

Research by wedding insurance comparison website HelloSafe in September indicated there had been a 32 per cent drop in unions taking place in the first nine months of 2020.

The full impact will not be clear for some time, but it follows a trend where marriage rates between opposite-sex couples were already in decline. The latest official figures show marriage rates were the lowest on record in 2017, with 21.2 marriages per 1,000 unmarried men and 19.5 marriages per 1,000 unmarried women. Around 242,842 marriages took place in England and Wales in 2017, a decrease of 2.8 per cent from 2016, according to the figures from the Office for National Statistics.

However, the number of civil partnerships are rising. There were 994 same-sex civil partnerships formed in England and Wales in 2019, an increase of 4 per cent. Meanwhile there were 167 opposite-sex civil partnerships formed in England and Wales on 31 December 2019 – the first day it was possible to do so following the change in legislation to extend civil partnerships rights to opposite-sex couples.

It’s not the most romantic reason for a proposal, but there are many financial and practical reasons why it can make sense to be joined together by law. According to the financial consultancy WealthiHer, the delay in weddings due to Covid means engaged couples are potentially missing out on up to £31m of rebates and tax benefits.

Marriage allowance

Couples who are married or in a civil partnership are potentially entitled to an annual tax reduction of £250 through the marriage allowance.

The benefit is only available if one half is earning less than £12,500 a year (below the personal allowance) and the other is a basic-rate taxpayer (meaning they have an annual income of less than £43,430 in Scotland and £50,000 elsewhere in the UK).

Couples can apply for the allowance if they are receiving a pension or even if they live abroad.

Claims can be backdated by up to four tax years (starting from 2016). Applicants can be made through the Government’s online tax portal, and the non-taxpayer should be the one submitting the claim.

You cannot claim the marriage allowance if you’re living together but are not married or in a civil partnership.

Inheritance tax

“One of the biggest benefits financially is on death, because assets can be passed between spouses free of inheritance tax, which can make an enormous difference to the tax due,” says Sarah Coles, a personal finance analyst at Hargreaves Lansdown.

Everyone in the UK can pass on £325,000 free of tax on death. Homeowners can also pass on a further £175,000 if they leave their property to children or grandchildren (known as the residence nil rate band).

This means a total of £500,000 can be given away tax-free.

But couples who are married or in a civil partnership can have their wealth transferred to a surviving spouse without paying any inheritance tax, assuming one passes away before the other.

When couples leave assets to one another, their nil rate bands also pass over and so the allowance effectively doubles. It means a married couple may be able to leave an estate worth £1m tax-free on their death.

This option is not available to cohabiting couples.

Married couples also benefit from the fact that all money held in an Isa can be passed to their other half tax-free on death. The surviving spouse will inherit a one-off additional Isa allowance that’s equivalent to the value of their partner’s total Isa holdings on death. Unmarried partners do not get this benefit.


Workers in the UK fortunate enough to receive a final salary pension in retirement will likely be on a scheme where a surviving spouse gets 50 per cent of their pension on death. For people who are not married, it’s not guaranteed the partner will get this and it will usually be up to the discretion of the trustees whether or not to pay the benefit.

People in a defined contribution pension plan (where their future retirement income is determined by how much they have saved over the course of their working life) can pass on any unspent pension savings to anyone they like on death. So when paying into the pension it’s important to nominate who you eventually want to receive the money  – particularly if you are not married. For those who are married, any outstanding savings will pass over to the spouse, unless stated otherwise. Mor

“Pensions can be a problem as many workplace, personal and private pension schemes will only pass on benefits to a surviving partner if the couple has been married. Old pension pots from past employers can carry the name of a previous partner as a beneficiary. Not making a will can leave an unmarried partner with nothing and even if they have been left assets, they face paying inheritance tax on anything over £325,000, whereas money, property and belongings left to a spouse are free from tax,” says Zahra Pabani, family law partner at Irwin Mitchell.

Capital gains tax boost

Investments and rental property can be moved between spouses to take advantage of capital gains tax relief.

Capital gains tax is a levy applied on profits on certain investments (including rental property) when they are sold or given away. There is currently an annual allowance of £12,300 per individual. If an individual sells an asset for a profit above this, capital gains tax of up to 28 per cent is applied.

But the transfer of assets liable for the tax is exempt between spouses and civil partners. So a couple could make a profit of £24,600 before capital gains tax is applied.

Bereavement benefits

Bereavement support payments are available for those whose husband, wife or civil partner has died in the last 21 months.

There are two rates available, with all payments tax-free. For those in receipt of child benefit, an initial lump sum of £3,500 is paid followed by a monthly payment of £350 for up to 18 months. For those who do not get child benefit, they get £2,500 upfront followed by £100 a month for up to 18 months.

Currently, the benefit is not paid to couples who were living together but not married or in a civil partnership.

When it doesn’t pay to be married…

There are limited circumstances where being married can work against you within the tax system. One of these is in relation to property.

As Coles points out, if a married couple wants to buy a property and one has previously owned a property before, then neither are able to claim for first time-buyer stamp duty relief. If you’re unmarried, then you could get the relief (but the first-time buyer would have to be buying on their own).

“It can also help if you want to live separately. Married couples can only have one residence, so you’d need to choose one, and own the other as a second property – in which capital gains tax may be due when you come to sell. Unmarried couples can assign one house to each of them – provided that’s their primary residence – so neither are subject to capital gains tax,” adds Coles.

Extracted from an article by Elizabeth Anderson published on on 27 January 2021

Fogwill & Jones (Legal Services) Limited remains open during these unprecedented times with our staff working from home.  We are conducting meetings with our clients via Skype, Whatsapp, Zoom or on the telephone.

If you would like help with making a new Will please contact Helena Grady  on (0114 2588899).  Helena Grady is a Solicitor and member of the Society of Trust and Estate Practitioners (STEP) with many years’ experience.

Please note that, although Fogwill & Jones (Legal Services) Limited operate from the same premises as Fogwill & Jones Asset Management Limited they are entirely separate businesses.  The only connection is that both are owned by Colin Fogwill. If you are a client of Fogwill & Jones Asset Management Limited you are under no obligation to instruct Fogwill & Jones (Legal Services) Limited and you may choose to instruct alternative legal advisers.