Tax benefits from marriage

[Deleted User]

lisyloo said:

Grumpy_chap said:

purdyoaten2 said:

lisyloo said:

purdyoaten2 said:

There was a married man’s allowance (yes Man) which vanished when independent taxation came in in 1990. Unless neither of you are higher rate taxpayers and one of you has unused personal allowances there are no income tax ‘benefits’ associated with marriage. 

My husband pays me dividends on which I pay 0% or 7.5% dividend income tax rather than him paying 32.5%. I can then gift him the money back tax free.
I’d call that a benefit (not available to everyone).

Your husband is a shareholder (as are you) and he repeatedly waives his entitlement. You receive the dividend and transfer it to him?

Or the only shareholder is the author.

Otherwise, a dim view is taken of alphabet shares, whether by formal arrangement or by practice.

No doubt the author has an Accountant to provide appropriate advice.

thanks for you concern both, I will take it as well intended.
however we’d rather take it from qualified professionals who have a full understanding of all the details.

Again fair enough although I am a retired tax consultant and I know Jeremy has a similar background with considerably more experience than I. All well intended - absolutely!

[Deleted User]

Grumpy_chap said:

lisyloo said:

Sorry I mis-wrote it.
i can gift him other money back tax free e.g. my earned income (it’s allowed :-)

AIUI - anyone can gift anything to anyone else without there being an immediate tax implication.  The only change when gifts are between spouse are in relation to IHT.

lisyloo said:

the benefit however is using both zero and lower tax bands which many married couples with limited companies do.

And many do not do that using either alphabet shares or contrived employment - both have been heavily clamped down on in recent years.

Fortunately:

Grumpy_chap said:

No doubt the author has an Accountant to provide appropriate advice.

lisyloo said:

however we’d rather take it from qualified professionals who have a full understanding of all the details.

The professional advice from your Accountant who has the appropriate liability insurances and all the facts will always be better than the necessarily limited comments from any public forum.

We've probably also varied from the intent of the question asked by the OP.

Agreed - although I would still be reluctant to recommend the use of dividend waivers as a benefit of marriage. 

It does bring me back though to more than one occasion where I was genuinely asked if it was a good idea to get married to gain the tax benefits which did exist pre-1990.

lisyloo

[Deleted User] said:

Grumpy_chap said:

lisyloo said:

Sorry I mis-wrote it.
i can gift him other money back tax free e.g. my earned income (it’s allowed :-)

AIUI - anyone can gift anything to anyone else without there being an immediate tax implication.  The only change when gifts are between spouse are in relation to IHT.

lisyloo said:

the benefit however is using both zero and lower tax bands which many married couples with limited companies do.

And many do not do that using either alphabet shares or contrived employment - both have been heavily clamped down on in recent years.

Fortunately:

Grumpy_chap said:

No doubt the author has an Accountant to provide appropriate advice.

lisyloo said:

however we’d rather take it from qualified professionals who have a full understanding of all the details.

The professional advice from your Accountant who has the appropriate liability insurances and all the facts will always be better than the necessarily limited comments from any public forum.

We've probably also varied from the intent of the question asked by the OP.

Agreed - although I would still be reluctant to recommend the use of dividend waivers as a benefit of marriage. 

It does bring me back though to more than one occasion where I was genuinely asked if it was a good idea to get married to gain the tax benefits which did exist pre-1990.

I did not recommend a waiver (or alphabets or contrived employment).

Thanks again, lesson learnt.

Grumpy_chap

Actually, sharing the income from a private Ltd Co. does not fall into the subject to the thread title "Tax benefits from marriage" however the income split is facilitated.

The income split can be arranged for any two individuals, so it could be a spouse, or a long-term partner, or last night's Tinder date.  Obviously, for practical purposes, a certain amount of longevity in the relationship and shared expectation of continuity is probably likely to be a pre-requisite of the Ltd Co. income split being put into place.  Marriage, per se, is not.

The same applies to being gifted a portion of your partners inheritance and then putting it into your ISA.  Longevity and expectation of continuity of the relationship is likely a pre-requisite for this kind of behaviour, but marriage is immaterial.  You could still decide to gift a portion of inheritance to last night's Tinder date and, once gifted, the recipient can put the money into an ISA (subject to the same rules that apply to everyone), or the recipient of the gift could buy a Bentley or gamble it or whatever.

Both splitting Ltd Co income and splitting inheritance are really all part of the act of being in a committed relationship and sharing as one.

lisyloo

Grumpy_chap said:

Actually, sharing the income from a private Ltd Co. does not fall into the subject to the thread title "Tax benefits from marriage" however the income split is facilitated.

The income split can be arranged for any two individuals, so it could be a spouse, or a long-term partner, or last night's Tinder date.  Obviously, for practical purposes, a certain amount of longevity in the relationship and shared expectation of continuity is probably likely to be a pre-requisite of the Ltd Co. income split being put into place.  Marriage, per se, is not.

The same applies to being gifted a portion of your partners inheritance and then putting it into your ISA.  Longevity and expectation of continuity of the relationship is likely a pre-requisite for this kind of behaviour, but marriage is immaterial.  You could still decide to gift a portion of inheritance to last night's Tinder date and, once gifted, the recipient can put the money into an ISA (subject to the same rules that apply to everyone), or the recipient of the gift could buy a Bentley or gamble it or whatever.

Both splitting Ltd Co income and splitting inheritance are really all part of the act of being in a committed relationship and sharing as one.

Yes you can gift to whoever you like but there’s Potentially IHT

https://www.gov.uk/inheritance-tax/gifts

Who does not pay Inheritance Tax

Some gifts are exempt from Inheritance Tax.

There’s no Inheritance Tax to pay on gifts between spouses or civil partners. You can give them as much as you like during your lifetime, as long as they:

• live in the UK permanently
• are legally married or in a civil partnership with you

——————————————-

It’s there I black and white but just to be clear living as man as wife, having children together etc. does not qualify. It’s clear that relationships need to be formalised.

Grumpy_chap

To be clear, the IHT variance only affects gifts.

It would not change the basis for having a Ltd Co. and arranging to split the income with a partner through contrived employment, dividend waivers or alphabet shares.