Website created by One Care iT Limited
Copyright © Hillingdon Chamber of Commerce
ALL RIGHTS RESERVED.
Are you getting married? Have you thought of the legal and tax ramifications? Sometimes you need to let your head rule your heart.
Going into a formal relationship with your eyes wide open means more than planning the wedding day and honeymoon. Most parties to a marriage or registered civil partnership do not consider the tax and legal change in their circumstances and the consequence of such on children and dependents.
Since Independent Taxation was introduced in 1990 we have not had to consider our partner’s income, but with the Government wanting to encourage formal, legal relationships to reverse the trend of co-habitation, incentives such as the transferable couples allowance have taken us back to the pre-1990 days of sharing information about our partner’s income. As two single people, you will not have had to consider your partner’s income level when claiming child or other benefits. You may now have to give up your entitlement if your partner’s income exceeds certain thresholds, or file a tax return and accept that the benefit will be clawed back – with interest, if you overlook your legal obligations. Many couples do not wish to share the details of their income but could be forced into doing so, to ensure compliance with tax regulations.
Were you or your partner born overseas? Your domicile status may have a bearing on your UK tax position. It is not uncommon for spouses or civil partners to move assets between themselves to facilitate equalisation of income, by making full use of lower rate bands and allowances. Whilst this is all perfectly legitimate, there could be inheritance tax consequences if your domiciles are different.
Do you have a Will? Unless your Will has been made in contemplation of your upcoming nuptials (which requires the inclusion of specific legal wording), it will become invalid on marriage. If there is no Will, the laws of intestacy will be applied on death, meaning that there is a prescribed statutory division of your estate, which may not reflect your wishes or expectations of your family.
Some positive news is that gifts received on the occasion of marriage or civil partnership can be made free of tax. Depending on the closeness of the relationship, up to £5,000 can be given and received without any tax consequences.
A successful marriage or civil partnership needs trust, love and commitment from both parties; however it is always a good idea to ensure you start off your new life together on a solid base by discussing the financial and legal impact of your changing relationship which will help to avoid complications further down the road.
Jonathan Seymour is a Partner and is based in the Heathrow office of top 20 Chartered Accountancy firm Kingston Smith LLP. Contact Jonathan on 0208 8848 5531 for further information.