Picture this scene – it’s the first Monday back at work in 2025, January 6th, and I’m driving to a meeting. The radio breaks the morning routine with a sobering statistic – it’s the day more people start divorce proceedings than any other all year. As a lifelong romantic (and yes, full disclosure, a divorcee myself), I felt a pang of sadness.
Sure, I understand that as we grow older, the reasons for marriage shift. Some carry the baggage of past experiences, yet amidst the emotional complexities, it’s easy to overlook something significant: the practical, financial advantages of marriage.
This article is here to remind those of you who are married about the good stuff that comes with saying “I do.” And for anyone still on the fence, perhaps it might even nudge you closer to, as Beyoncé might say, “putting a ring on it.” Whether you’re married or in a civil partnership, these benefits apply to you, but sadly, they don’t extend to cohabiting couples.
Let’s explore why tying the knot might just be more rewarding than you thought
1. Marriage allowance
Introduced in 2015, Marriage allowance allows one partner to transfer a portion of their personal income tax allowance (up to £1,260 in the 2023/2024 tax year) to their spouse or civil partner. This can reduce the tax bill of the higher-earning partner by up to £252 annually (20% of the transferred £1,260). To qualify, one partner must earn less than the personal allowance threshold (currently £12,570), while the other must be a basic rate taxpayer (earning between £12,571 and £50,270). If you’re in Scotland, your partner must pay the starter, basic or intermediate rate, which usually means their income is between £12,571 and £43,662.
This transfer is particularly beneficial if one partner is not using their full tax-free allowance and the other is paying tax at the basic rate. Full details are here: Marriage Allowance: How it works – GOV.UK
2. Tax-free gifts between spouses
Married couples can gift assets to each other without suffering capital gains tax (CGT). This is particularly beneficial when transferring property or investments between spouses. For example, if one partner sells, for example, a second home or shares, to the other, it would not trigger CGT. There are no limits on the value of these transfers, making it easier to share wealth between partners. This is particularly useful if the other partner has not used their CGT allowance, currently £3,000 p.a, as rates of capital gain taxation range from 18% to 24% in most circumstances (some situations attract slightly different rates. Details are here: Capital Gains Tax rates and allowances – GOV.UK
Further details of spousal CGT exemptions are here: HS281 Capital Gains Tax civil partners and spouses (2024) – GOV.UK
3. Inheritance and estate planning benefits
Marriage offers significant advantages regarding the inheritance tax (IHT) implications and the transfer of wealth upon death.
Inheritance Tax Exemption
In the UK, inheritance tax (IHT) applies to estates valued over £325,000, which is known as the “nil-rate band”. Additionally, there is a Residential Nil-Rate Band (RNRB) of £175,000 per person for those leaving their main home to direct descendants (such as children or grandchildren).
This RNRB starts to reduce (taper) if your estate is worth more than £2 million, decreasing by £1 for every £2 above this threshold. Assuming the RNRB is not reduced, an individual can pass on up to £500,000 (£325,000 + £175,000) of assets without inheritance tax. Any value above this amount is taxed at 40%.
Advantage one is when one spouse passes away, their estate can be passed to the surviving spouse tax-free. This includes both physical assets and the value of pensions or investments.
Advantage two is that the surviving spouse inherits the deceased’s unused nil-rate band and residential nil-rate band. This effectively doubles the amount that can be passed to beneficiaries without incurring Inheritance Tax (IHT). For instance, instead of passing £500,000 tax-free, you could pass on £1,000,000. This represents a tax saving of 40% on the additional £500,000 – an impressive £200,000 retained within your family rather than paid to HMRC. Follow this link for more detailed information – Transferring unused basic threshold for Inheritance Tax – GOV.UK
4. State pension benefits
A married couple is eligible for an additional boost to their state pension entitlement. If one spouse does not have enough national insurance (NI) contributions to qualify for the full state pension, they may be able to inherit a portion of their spouse’s pension entitlement. This means that in the event one spouse passes away, the surviving spouse can inherit the deceased’s basic state pension and additional state pension (if applicable), potentially increasing their overall pension income.
5. Financial security and protection
Marriage provides a safety net for both partners in terms of financial security, particularly if one spouse is financially dependent on the other.
Joint debt responsibility
While debt isn’t always a positive financial factor, being married means that spouses can share financial responsibilities, such as taking out joint mortgages, loans, or credit facilities. This joint responsibility can sometimes lead to more favourable terms for obtaining credit, as the lender may consider the couple’s combined income and assets when determining lending criteria.
Two can be cheaper together
Some financial products and services are specifically tailored for married couples, such as joint life insurance policies, joint bank accounts, and mortgage plans. These products can offer more favourable rates than individual products. For example, joint life insurance policies, such as first-event policies (which pay out upon the first partner’s passing), tend to be more affordable and offer flexibility. They allow the surviving spouse to maintain their lifestyle after the loss of their partner, often at a lower cost than purchasing two separate policies. That said, I personally prefer the separate policy approach. While slightly more expensive, it can provide two payouts if both partners pass away – a crucial consideration if you have children to provide for. But I digress…
Marriage is on the decline
According to the Office for National Statistics (ONS), the number of marriages* or civil partnerships in England and Wales has fallen to a record low with a reduction of 42% in 50 years from 1972 to 2022. While the reasons behind this trend are complex and personal, one thing is clear: marriage or civil partnership can offer undeniable financial benefits.
Whether you’re a hopeless romantic or a pragmatic planner, these advantages are hard to ignore. Perhaps 2025 is the year to consider getting down on one knee, and putting a ring on it!
Were you aware of the financial advantages of being married? Let us know in the comments below
Tax is dependent on your own circumstances and personal situation, and is subject to changes based on UK legislation and taxation regime. This article is based on our understanding of current legislation.
* Marriages in England and Wales – Office for National Statistics