Valentine’s day is different this year…., We will be experiencing the date night out- as the date night in, starring a three–course microwave meal and a ticket to the sofa cinema!
In recent years, studies highlighted that over a million people got engaged on Valentines Day. With the current pandemic, who knows whether that will go higher or lower… depends on how much one likes spending lockdown with their spouse.
What’s mine is yours
Marriage Allowance lets you transfer £1,190 of your Personal Allowance to your husband, wife or civil partner if they earn more than you and they are a basic rate taxpayer (earned up to £46,350 for 2017/2018 tax year). This reduces their tax by up to £238 in the tax year (6 April to 5 April the next year). To benefit as a couple, you (as the lower earner) must normally have an income below your Personal Allowance – this is currently £11,850.
Transferring assets between spouses
Speaking of engagements, it is still a shock how so many do not take advantage of the marriage allowance scheme. Marriage allowance is a government scheme which is designed to provide tax relief benefits to married couples.
With this, if one of the two individuals earn less than the current personal allowance £12,500 and with the other earning the basic tax rate (Net earnings of £12,501 – £50,000). You are eligible to top-up the spouse’s personal allowance of up to a maximum of £1,250. By transferring this gift to your partner, they can pay up to £250 less on their tax liability. (There is a gift idea for Valentines, for ya)
Conditions of this:
- You need to be married or in a civil partnership.
- One partner must earn under the personal allowance.
- The other must earn between £12,501 and £50,000 (anyone that falls in the basic tax rate band).
- You must both have been born after 6th April 1935. (Fun fact: that was a Saturday)
YOU CAN NOT CLAIM MARRIAGE ALLOWANCE IF YOU’RE LIVING TOGETHER BUT YOU’RE NOT MARRIED OR IN A CIVIL PARTNERSHIP.
If you were lucky and the question was popped before this Valentines and after the 5th April 2016 (Fun fact: The day Batman vs Superman: Dawn of Justice came out).
You are eligible to back date any marriage allowance, in alignment with that year’s personal allowance rate.
For you, singletons out there, you’re benefits are double helpings on those supermarket meal deals and being able to eat a whole tub of Cookie Dough Ice-Cream without worrying about a sneaky second spoon entering the warzone.
For more information about the Marriage allowance (unfortunately not the ice cream warzone… every person for themself), please contact our office and we would be happy to help – 01273 441187
Taxes on wedding gifts
When you are deciding what makes up a suitable wedding present, consider this. Each tax year, you can give away wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great-grandchild, £5,000 for a child) or normal gifts out of your income, for example, Christmas or birthday presents – you must be able to maintain your standard of living after making the gift.
“An engagement ring should be 3x your monthly salary … “
Each tax year, you can also give away:
- Wedding or Civil ceremony gifts of up to £1000 per person (£2,500 for a grandchild or great-grandchild. £5,000 for a child)
- Normal gifts out of your income, for example, Christmas or birthday presents- you must be able to maintain your standard of living after making the gift
- Payments to help another person’s living costs, such as an elderly relative or child under 18
- Gifts to charities and political parties
However, if you’re the singleton amongst your friends and family, there are many other tax reliefs available to you throughout your tax year that don’t have a romantic link this Valentines.
Give PJCO a call on 01273 441187 to help you pay as little tax possible, legally.