Understandably, tax will not be the first thing on your mind if you’re planning a wedding, or going through a divorce. But it’s important to know the tax implications of these life changing events so that you don’t pay more tax than you have to.
Tax Implications Of Marriage
It is common now for couples to have two separate homes when they get married (civil partnerships have the same legal status as marriages and are taxed in the same way). Unmarried couples can each have a property named as their main residence for Capital Gains Tax purposes, but once married, you can only have one. This means that if you sell your second property, you may have to pay Capital Gains Tax on some of the profit.
When you get married, you can make unlimited gifts to your spouse – for tax purposes of course! Spouses enjoy the ability to transfer property and assets between each other free of Inheritance Tax and Capital Gains Tax, which can help to maximise tax savings.
Marriage also revokes any Will you have made and you will need to make a new one. If you have children from a previous relationship you may wish to ensure a financial legacy for them. In this instance you could consider a special type of trust to protect their inheritance in case your spouse remarries following your death.
Tax Implications Of Divorce
During a divorce, the timing of the transfer of belongings and property can be very important. For Income Tax and Capital Gains Tax purposes it is not the date of the divorce which is key, but the date of permanent separation.
Transfers of property should ideally take place during the tax year of separation to avoid a tax liability. For Inheritance Tax purposes the key date is the date of divorce. As long as a couple are legally married gifts between them will be exempt from Inheritance Tax.
Once you’re officially divorced, you will have new life to get on with and new things to think about. For example, you might have to complete a Self Assessment tax return for the first time due to wealth you’ve received as part of the settlement.
It’s also worth looking again at how your wealth is organised, to ensure you’re making the most of any tax breaks available to you.
How Our Tax Experts Can Help You
We have a team of expert tax professionals who can help you get your affairs in order in your new life. We can provide tailored advice to your circumstances, including:
Self Assessment tax returns
- Income Tax
- Capital Gains Tax
- Inheritance Tax
Get In Touch With No Obligation
Call 0370 1500 100 or send us an email for a no obligation, confidential discussion about your situation. Our specialist tax and trusts team are ready to help.