16 February 2016

How getting married changes your finances

Valentine’s Day is one of the most popular days of the year to pop the question , and after February 14th it’s likely quite a few couples will be busy planning their nuptials in the coming months.

But as well as choosing a venue and floral arrangements and budgeting for the big day, it’s important to think about the financial implications of actually being married.

Tying the knot means officially sharing your lives over the long term. But how exactly does it affect your personal finances? From opening a joint account to saving for your first home together, there’s a lot to consider. We take a closer look at some things to think about in the run up to the big day and further down the line.

Things to think about now

My spouse automatically becomes joint owner of any property I own

FALSE: If you are an owner-occupier (rather than buy-to-let) and the property is your matrimonial home, you both have the right to stay in it (known as ‘home rights’) unless a court orders otherwise. But if you are the sole owner of the property and your name is on the mortgage and title deeds, your spouse would only gain ownership if a court decided this as part of a divorce.

My spouse’s credit record can affect mine

IT DEPENDS: According to Experian, marriage in itself doesn’t link up your credit records. But if you apply for credit jointly, the lender will be able to look at both your credit reports when making a decision. If you think one of you may have a poor credit score, talk it over with your partner before applying for credit jointly.

There are tax advantages to getting married

TRUE: There are a couple of tax benefits for married people and civil partners.

  • Marriage Allowance means you can transfer part of your Personal Allowance (the amount you can earn without paying tax) to your partner. For 2015/2016, the amount is £1,060, which means they’ll pay £212 less in tax. This only applies if neither of you is a higher-rate taxpayer

  • Inheritance tax is another area where married couples benefit. If you leave everything to your spouse, they will have no inheritance tax to pay, even if the amount you leave is more than the current £325,000 inheritance tax threshold. Additionally, they ‘inherit’ your inheritance tax allowance – so they can leave up to £650,000 without becoming liable for inheritance tax

  • Capital gains tax rules allow spouses and civil partners to pass assets to one another freely without having to pay tax on any increase in value.

More about Married Couples Allowance and inheritance tax

Any state benefits we receive will be doubled

FALSE: State benefits are usually calculated using different rules for couples, rather than doubling the individual entitlements. For example, if you have a partner (whether you’re married or not), you can’t claim income-based Jobseekers’ Allowance if they work more than 24 hours per week, regardless of your own income. If you need to claim Housing Benefit, you will be expected to share a bedroom with your partner, so you will only receive enough benefit to cover one-bedroom accommodation. Only one half of a couple can claim Housing Benefit.

Things to think about in the future

If I die, my spouse automatically inherits everything

FALSE: If you haven’t made a valid Will, you’re said to have ‘died intestate’ and there is a set of rules that come into play to determine who inherits. These are ‘the rules of intestacy’, and they state that a spouse or civil partner inherits all personal possessions and the first £250,000 of the deceased partner’s money if they were married at the time of death. (Children or grandchildren will also get a share if the estate was worth more than £250,000.)

However, if you do write a Will, your spouse can inherit as much or as little of your property as you choose.

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