Love is in the air (and lots of tax benefits too!)
Love is in the air as Valentine’s Day approaches. From recent research, it has been found that over one million people will get engaged on Valentine’s Day this year. If you have that niggling feeling that your loved one is thinking of asking you for your hand in marriage, it could come with a number of financial benefits.
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
If you are living with your spouse or civil partner and you transfer an asset to them, you will not have to pay Capital Gains Tax (CGT). When a couple is married or in a civil partnership, assets can be transferred between them on a nil gain, nil loss basis, meaning that no taxable gains arise on the transfer. However, if the fairy tale doesn’t last, this spouse exemption ends at the end of the tax year following separation.
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 … “
Or so this is what recent research suggests. However, think twice about the cost of your engagement ring as the cost cannot be deducted as a write-off on your personal income taxes. When you purchase an engagement ring, it is not only a very personal choice, but it is also a personal expense. While that personal expense may be expensive, it is not deductible on your tax return.
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.