23 March 2017
Pooling resources – why it’s worth seeking expert advice
MOVING IN WITH A PARTNER IS A RELATIONSHIP MILESTONE BUT WHILE IT’S NOT ROMANTIC, YOU SHOULD TAKE TIME TO CONSIDER YOUR FINANCIAL SITUATION, PARTICULARLY IF YOU ARE NOT GETTING MARRIED. SALINI BUNDOO, CHARTERED FINANCIAL PLANNER ON SPF’S WEALTH MANAGEMENT TEAM, EXAMINES THE ISSUES.
If you are not married or in a civil partnership, there are several allowances or benefits that you miss out on, such as the marriage tax allowance. This enables the non-taxpaying spouse to give up or ‘share’ some of their personal allowance to the basic-rate taxpayer, resulting in £220 of extra money in this tax year. You can also go back and claim last year’s allowance of up to £212.
If you aren’t married or in a civil partnership you also lose the ability to transfer or ‘swap’ assets in order to utilise both party’s annual capital gains tax exemptions, currently at £11,100 for the tax year 2016/17. Couples also lose out on the ability to inherit assets on death, which may be considerable in nature, especially if couples have been together for many years. Even individual savings account (ISA) portfolios can’t be inherited via the additional permitted subscription from spouses, which can be useful for the surviving spouse’s income (tax-free) source over time.
However, all is not lost – there are some steps couples can take. If you or your partner has an adverse credit score, for example, you may wish to separate out your debt so that the other person is not affected. Both of you should also utilise your ISA allowance as each is a separate asset belonging to the named ISA holder.
You should also plan ahead: it is worth completing a separate nomination form for each pension scheme so that your pension benefits can be paid to your long-term partner in the event of your death. Writing a Will is also important to ensure assets are shared out in the way you would like rather than leaving it to the laws of intestacy to prevail in the event of your death.
Whether you come to the conclusion that getting married gives you more financial benefits to spend on romantic treats or not, it is worth seeking independent advice as to the best way to structure your finances as a couple.