We all know that tying the knot can affect your day-to-day money management, but exactly what effect does marriage or a civil partnership have on your financial status? We take a look.
There was a time when making the leap from single life to married bliss came with a great range of tax incentives. Married couples used to be viewed by the government as one single taxable entity and so you would be taxed less after getting married.
The picture is different today, however, there are some important things to note that will affect your finances after marriage or a civil partnership.
You should inform HM Revenue & Customs (HMRC) of your new marital status to make sure you are taxed correctly.
If you or your partner were born before 6th April 1935, you’re married or in a civil partnership, and you live together, you could get the Married Couple's Allowance. It can reduce your annual tax bill by £353 to £912.50.
If you were both born after 1935, you may be able to claim Marriage Allowance, which the government introduced in April 2015.
This allows a couple to save up to £252 on their tax bill if they are married or in a civil partnership. It allows one partner to transfer £1,260 of their unused tax-free personal allowance to their partner. To apply, one partner must be earning less than their personal allowance, of £12,570, or not paying any income tax, and the other must pay basic-rate income tax and earn more than £12,571.
Any monetary gifts between you and your spouse made during your lifetime are tax-free. Also, you can leave any possessions and property to your spouse tax-free after you die, meaning the surviving partner effectively gets double the tax-free allowance for inheritance tax purposes.
Your capital gains tax exemption is also effectively doubled, and you and your spouse can transfer assets between each other tax-free during your lifetime.
Getting married or being in a civil partnership can mean you pay less tax on your savings interest if one of you is in a different tax bracket to the other.
If one of you is a basic-rate taxpayer and the other does not pay tax, you can keep all your savings in the name of the non-taxpayer and enjoy tax-free interest on it all - providing the interest earned does not take them over the taxable income threshold.
Likewise, if one of you is a higher rate taxpayer and the other basic rate, you can apply the same rules and take advantage of the rate of tax of the lower rate taxpayer.
As soon as you get married, your existing will automatically becomes invalid. You will need to look into setting up a new will, which could name your spouse as your primary beneficiary.
It may also be a good idea to consider getting life insurance if you are not already covered, particularly if you have financial commitments that one person would not be able to meet on their own, like a mortgage or providing for children.
Being 'financially associated' means you will both leave a record on each other's credit history showing that you have had a financial relationship together. Although saying your vows ties you together in many ways, it does not create a financial association between the two of you.
The main thing that creates a financial association between two people, is applying for a joint credit agreement such as a joint current account, mortgage or loan.
Changing your surname may have a temporary impact on your credit record though, so make sure you include your old and new surname on any future credit applications.
Doing this will allow lenders to find your full credit profile, as the following short video from the credit experts at Experian explains.