For Richer or Poorer: six financial reasons to marry

By Rachel Giles

Partner

26 August 2025

Insights News

With wedding season in full swing, the air is redolent with romance and confetti. Whilst love is very much the driving force for most couples’ decision to wed, governments have often built in tax benefits to marriage in order to encourage couples to tie the knot, so let us lift the skirts of matrimony, to examine the garter of sound tax planning beneath.

Throughout this article, references to marriage include Civil Partnership, which receives exactly the same tax treatment as traditional marriage.

Lifetime Gifts

All gifts made between spouses are tax-free.  They neither count towards your £3,000 annual exempt amount, nor fall into account for inheritance tax (“IHT”) if you die within seven years of making the gift.

Any gifts – either made in your lifetime or on death – also pass to your spouse free of capital gains tax (“CGT”). However, lifetime gifts between spouses are not rebased, so an eventual disposal by the recipient will be subject to CGT on the difference between the value at the date of disposal and the value on the date the original spouse first acquired the asset.

Inheritance and Capital Gains re-basing

On death, anything you leave to your spouse, whether in your Will or by right of survivorship (for jointly-owned assets), is free of IHT. But if unmarried couples wish to provide for one another on death, the inheritance over £325,000 will be subject to IHT at 40% (and lifetime gifts would utilise the donor’s nil rate band).

Gifts on death are rebased, and thus leaving assets to a spouse by Will is an excellent way of washing out any gains. The recipient spouse can dispose of the asset soon after inheriting it, with no (or very minimal) CGTand completely free from IHT.

Transferrable nil-rate band and residence nil-rate band

Each person, whether married or not, can leave £325,000 to persons other than their spouse free of IHT. Where the estate is valued at under £2million and the deceased’s residence passes to direct descendants on death, there is an additional residence nil-rate band of £175,000. A person who has children and owns property can therefore leave a maximum of £500,000 free of IHT.

Where a married person leaves all their assets to their widow, the nil-rate bands will be unused and instead can be transferred to the second spouse’s estate.  A spouse who inherits everything on the first death can therefore leave up to £1million tax free on their own subsequent death.

(The residence nil rate band is tapered for estates over £2million but the precise way in which that works is beyond the scope of this article).

Maximise allowances

Gifts between spouses can enable CGT savings to be maximised through the annual allowance and lower rates. Each person is able to realise tax free capital gains of up to £3,000 per year. As lifetime gifts between spouses are tax-neutral, a spouse owning an asset pregnant with gain can transfer part of the asset to his or her spouse so that on disposal, each party’s annual allowance is utilised. If one spouse is a basic rate taxpayer, they will pay CGT at a lower rate (18% as opposed to 24% on most assets).

Inherit the ISA allowance

Many people accumulate a substantial ISA allowance over their lifetime, saving up to £20,000 per year in these tax-efficient plans. On death, the ISA assets continue to benefit from their income tax-free and CGT-free treatment within a limited time frame.  However, a spouse inherits their deceased partner’s ISA allowance (whether or not the ISA itself passes to the spouse on death). A widower may therefore invest up to the amount his deceased wife left in ISAs at her death, and continue to enjoy tax free income and gains from those savings and investments for the remainder of his life.

Provision on Intestacy

Marriage is not without its downsides, and if you choose to marry on the strength of this note (such is my persuasive force) please be aware that marriage automatically invalidates any Will you might already have made. It is always better to have a well-drafted and up to date Will in place, and Taylor Walton’s experienced team can assist with this.

When a person dies without a Will, the intestacy rules govern who should inherit the estate. Spouses are included in the line of succession for an intestate estate (although may have to share with children, depending on the values involved), but unmarried partners are not included and would not benefit at all without recourse to the Courts.

A note of caution

Of course, despite the above benefits, we would always counsel against marrying only for the financial incentives built into our tax system. In addition, the pooling of marital assets which allows couples to take advantage of the various tax benefits should only occur within secure and trusting marriages (without coercion or abuse). Money makes the world go round but, in the words of Elizabeth Barrett Browning, love is what makes the ride worthwhile.

If you have any questions regarding the content of this article, our Private Client team can help. Please contact us here and a member of our team will get in touch.

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Please note that the contents of this article are intended solely for general information purposes and should not be considered as legal advice. We cannot be held responsible for any loss resulting from actions or inactions taken based on this article.