Marriage still has some tax benefits

Despite the perception that marriage offers little financial advantage in today’s tax system, several genuine tax benefits remain available to married couples and civil partners in the UK. At Severn Accounting, we regularly advise clients who are unaware of these reliefs, sometimes costing them thousands of pounds in unnecessary tax. If you’ve recently married, are planning to tie the knot, or are simply curious about whether your household is making the most of the tax system, this post is for you.

Marriage Allowance: A Straightforward Win

The most accessible benefit for many married couples is Marriage Allowance. If one spouse or civil partner has unused personal allowance (the threshold below which you pay no income tax), they can transfer it to their partner—up to £1,260 for the 2024/25 tax year.

This applies if one partner earns below the personal allowance threshold (£12,570) whilst the other earns between £12,570 and £50,270. The benefit is worth up to £252 in tax relief annually. It’s remarkably simple to claim via the HMRC website, yet we encounter couples who’ve been married for years without realising they qualify. Even if you only marry partway through a tax year, you can claim Marriage Allowance from the month following your marriage.

The relief applies regardless of whether you’re employed, self-employed, or a combination of both. It’s one of the few truly straightforward tax breaks that remains genuinely useful.

Spouse Exemption on Transfers of Assets

When you transfer assets between spouses during marriage or following separation, no Capital Gains Tax is charged. This exemption is powerful and often overlooked in tax planning conversations.

Suppose your spouse has accumulated significant gains in an investment portfolio, whilst you have unused capital gains allowance (£3,000 for 2024/25). You can transfer assets from your spouse to you, crystallising a gain on their part with no CGT liability, then trigger that gain on your side using your allowance. This can defer or eliminate tax that would otherwise be due.

Similarly, if one spouse is facing a large chargeable gain and the other has carried-forward losses from previous years, strategic transfers between you—again, without CGT consequence—can optimise the household position. This requires careful planning and proper documentation, but the tax savings can be substantial.

Spousal Exemption from Inheritance Tax

Inheritance Tax (IHT) can be the most significant tax burden facing families. However, gifts between spouses during life and transfers on death are entirely IHT-exempt, regardless of amount.

This means a surviving spouse can inherit the entire estate of their late partner without triggering any IHT. The surviving spouse also inherits any unused nil-rate band (currently £325,000) of their deceased partner—a relief known as the transferable nil-rate band. For married couples with substantial assets, this can shelter up to £650,000 from IHT between them, provided proper election is made.

If you’re unmarried but in a committed relationship—including same-sex partnerships—these exemptions do not apply. Marriage or civil partnership registration is the only gateway to this relief. For many families, this single benefit justifies formalising a long-term partnership from a tax perspective alone.

Pensions and Life Insurance

Finally, marriage affects pension flexibility. A surviving spouse can inherit certain pension benefits without triggering income tax on death, whereas an unmarried partner has no such entitlement. Additionally, certain life insurance policies can be written into trust for a spouse, avoiding IHT on the proceeds.

These provisions make marriage relevant in estate planning, particularly for households with pensions or life insurance covering a mortgage.

Conclusion

Whilst the personal tax system no longer “rewards” marriage in the way historical tax structures did, meaningful benefits certainly remain. Marriage Allowance alone is worth claiming if you qualify, and for households with investment portfolios or significant assets, the capital gains and inheritance tax exemptions can be transformative.

Tax rules change regularly, and your household circumstances are unique. Marriage affects more than just your personal life—it shapes your tax obligations and opportunities. It’s worth reviewing your arrangements with a qualified accountant to ensure you’re claiming everything due.

For tailored advice, contact Severn Accounting—we’re here to help.