Save Inheritance Tax With 10 Reasons to Get Married

Published / Last Updated on 15/12/2023

For the purposes of these notes, ‘married’ shall include legal marriages and civil partnerships and vice versa.

Inheritance Tax (IHT) Allowances

We all have a Nil Rate Band (NRB) allowance of £325,000 (frozen since 2009 and stays frozen until 2028). This means on death we can gift up to £325,000 free of IHT.
If you own a property that you live in, you also have Residential Nil Rate Band (RNRB) allowance of £175,000 (introduced in 2017, increased over 4 years and now frozen until 2028). This means on death we can gift up property to direct line descendants using £175,000 RNRB allowance plus the £325,000 NRB i.e., up to £500,000 in total.
Many couples on 1^st death leaving everything to their partners and then to children or other loved ones.
If you are married or in a civil partnership, if you leave all to each other, gifts between spouses are exempt so you will not have used your NRB and RNRB totalling £500,000 on 1^st death. This is then transferred to 1^st death to the surviving spouse means they have their own £500,000 allowances plus the unused £500,000 allowances from 1^st death, meaning a total of £1m of allowances on 2^nd death. This is only available if you are married or in a civil partnership at the time of death.
If you are not married/civil partners, your allowances may be used up transferring assets to your common law partner on death, losing up to £500,000 in allowances that could have been unused and transferred (if married/civil partners).
By getting married or civil partnership it also allows us to plan and for assets from means testing for care fees for the surviving partner using both NRB and RNRB with Life Interest Trusts and NRB Trusts. Even if Life Interest Trusts and NRB Trusts were not in the Will, executors still have the option to consider Deed of Variation to change Will to then plan (after 1^st death) for Life Interest Trusts and NRB Trusts to protect assets.

Not married or in a civil partnership yet but do plan to be life partners? Get ‘hitched’.

9 other fiscal benefits to marriage:

If your common law partner dies without a will, they die intestate meaning that unmarried surviving partners will inherit nothing from their deceased partner as Intestacy Law passes assets to next of kin and bloodline only (does not include unmarried partners). Get ‘hitched’.
Unmarried partners will only have a right to contest a Will if they have co-habited for 2 years +. Get ‘hitched’.
Married/civil partner surviving spouses may get a boost to their state pension. Not all but some do depend upon when you married or deferred the state pension or are short on your own National Insurance credits/contributions. Get ‘hitched’.
If on low income, married/civil partner surviving spouses may benefit from a government Funeral Expenses Payment, unmarried surviving partners do not. Get ‘hitched’.
Married/civil partner surviving spouses benefit from government Bereavement Allowance payments for 12 months, unmarried surviving partners do not. Get ‘hitched’.
Married/civil partner surviving spouses benefit from surviving spouse pensions i.e., pensions continue on death, many pension schemes for not offer spouses pensions to unmarried surviving partners. Get ‘hitched’.
Married/civil partner surviving spouses benefit from sharing up to 10% on their unused personal tax allowances, saving the higher earner more tax as they get a boost to their personal tax allowance, unmarried surviving partners do not. Get ‘hitched’.
Certain trusts can continue when married protecting wealth/assets from further taxes, this may not be the case if you are unmarried/not civil partners. Get ‘hitched’.
Transfers of value or capital gains between married spouses/civil partners are free of capital gains taxes, this is not the case if you are unmarried/not civil partners. Get ‘hitched’.