Money has been the number one cause of divorce. Mismanaging money can cause lots of stress, it breaks the relationship and tears a family apart!
I understand how painful it can be when the families are stressed about money. As I’ve been working with money as profession, I also became so determined to explore the smart ways to manage money between couples, including smart tax planning, as I really would think acknowledging people about the ‘romantic’ side of tax can help them manage money smartly as a couple or a family.
Here are 4 tax tips for married couples that can be simple and useful.
1. Transfer your personal allowance
From April 2015, spouses will be able to transfer up to £1000 of their tax free allowance to each. This means that whichever one of you pays tax at the higher tax band can have extra relief of up to £200 per year.
This might not seem like a lot, but this gesture can affirm your longterm commitments as it is only available to married couples or civil partners – and the taxman thinks so too!
2. Giving the gift of love
If you’re looking to buy your loved one something special, there may be tax benefits! Small gifts (worth up to £50) are tax deductible from your business trading profit – but this excludes cash vouchers, tobacco and food.
Looking at something larger? If you’re wanting to be more generous, gifts between married couples are ‘no gain no loss’ for capital gains tax purposes.
What does this mean? That you do not need to pay capital gains tax as for inheritance tax purposes, gifts between spouses are subject to unlimited exemption if both are UK domiciled.
For non-UK domiciled spouses, there is a limit to the nil-rate band, currently set at
3. A romantic dinner for two
If you run a business, either as a sole trader or the director of a limited company, you may be able to use your company to pay
for your romantic dinner for 2, whilst reducing the company tax bills at the same time!
This only works if your spouse is your only employee, but an annual dinner is a tax- free benefit for staff if the cost of the event doesn’t go over £150 per head. Make this work for you by:
- Setting Valentine’s Day as an annual function to celebrate every year;
- Planning entertainment in advance, making sure it can be tax deductible or a tax-free remuneration;
- Budgeting carefully and consulting a professional if you need to!
4. Planning a long and happy retirement
If your loved one has no other UK earnings, you are able to pay up to £3600 per year into their registered pension scheme. However, these contributions must be made net of income tax.
For example, you can pay £2880 per year into your partner’s pension pot, and they will then receive a gift from the taxman in the form of £720 tax relief (20% of £2880).
I hope you do enjoy the romantic side of tax. It can be fun and knowing it is necessary for couples reducing the stress around money.
All the best!