Your nuptials are planned for June, so now could be a good time to talk

to each other about the tax aspects of the new legal entity you’re about

to create. OK, but just what exactly should you be talking about?

 

Your tax rights

 

Key benefits

 

If you take a long hard look at what you get by way of tax rights from

being married, most of them don’t apply until the point of divorce or

death. It’s probably not the most reassuring thought if

you’re contemplating working up the aisle, but if we are talking

cash, there are only limited tax benefits to being Mr & Mrs as opposed

to Mr & Ms. However, these benefits can make a significant differenced

to any couple’s tax bill, which is one of the reasons why the creation

of civil partnerships was seen as so important. So what are these

key benefits and how can you take advantage of them?

 

First and foremost when you get married you don’t have to say ‘I do’

to Inheritance Tax (IHT). Although IHT used to be something only

the wealthy paid, decades of soaring house prices have changed all that.

 

Inheritance Tax

 

Recap

 

In the current tax your (2008/9) you have to pay IHT (or rather the person sorting out your affairs has to pay it out of your estate) if the property and investments etc. that you leave add up to more than £312,000.

 

This is somewhat of a simplification, because a whole industry has grown up around inventive ways of avoiding IHT. However, you don’t need to take out a clever policy; one easy wasy to beat the Taxman is to get married or enter into a civil partnership.

 

Tip 1

 

Your friends and relatives can make IHT-free gifts to either you or your spouse. The limits are £5,000 if the donor is a parent or £2,500 if the donor is a grandparent or great-grandparent.

Otherwise, the limit is £1,000.

 

Tip 2

 

The marriage invalidates any will inplace before the wedding – unless it was evidently written in contemplation of the wedding. So one of the first things you should do on your return from honeymoon is to make a new one. The mess left behind should you die intestate (without a valid will) cannot be over-emphasised, especially if you are the sole director of your company.

 

Tip 3

 

The existence of transferable nil-rate bands (the £312,000 threshold for 2008/09 ) makes IHT planning between married couples easy. A simple will leaving everything to the surviving spouse can now avoid IHT on the first death and maximise the use of both nil-rate bands.

 

Horse and carriage

 

CGT

 

The other main news if you are married or in a civil partnership, is that you can also give anything you want to your spouse or civil partner and not pay Capital Gains Tax (CGT), no matter how valuable it is.

 

Tip

 

Don’t transfer assets between you until after you are married. You can reduce your CGT bill in two ways: by giving away assets to your spouse for them to sell or by owning them jointly. Either way, you are doing this to use up two lots of your annual allowance.

 

Warning

 

Bear in mind that if you give something away to your spouse or civil partner, you can’t ask for it back. You may save tax but if you split up, you could end up much worse off.