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MARRIAGE may be in long-term decline but couples who have tied the knot still reap the financial rewards.
Some 3.3 million cohabiting couples are putting their finances at risk by failing to realise they have fewer legal and benefit entitlements, according to new research from Aviva.
Managing director Paul Brencher says this is a growing problem as more of us are marrying later or not at all: “Cohabiting couples do not enjoy the same financial benefits as those who are married or in a civil partnership.”
Wrongly, many believe they are due the same benefits, causing problems if they split or one dies, he adds.
Marriage still pays, here’s how. The Marriage Allowance saves married couples up to £220 this tax year, by letting the higher earner transfer £1,100 of their personal tax allowance to the lower earner.
You can also backdate your claim to April 6, 2015, and get a further £212, or £432 in total. This only applies if the lower earner has income of £11,000 or less. Apply online at gov.uk/ apply-marriage-allowance.
Marriage also brings inheritance tax (IHT) breaks that could be worth tens of thousands of pounds, says Lucy Brennan, partner at accountancy firm Saffery Champness: “Married couples and civil partners can pass assets to their other half completely free of IHT when they die and the tax benefits can be passed on when the second spouse dies.”
This effectively doubles the individual £325,000 IHT allowance to £650,000, but not for cohabiting couples. Assets above the IHT threshold are taxed at a punitive 40 per cent, Brennan says: “An unmarried couple with an estate valued at £600,000 could trigger a tax bill of £110,000, but if they were married there would be no IHT to pay.”
CAPITAL GAINS TAX
Married couples can also cut any capital gains tax (CGT) liability, because they can transfer assets between themselves without triggering a tax charge.
Brennan says: “This allows couples to make use of both their annual CGT exemptions, which lets them each make gains of £11,100 this tax year without paying any CGT at all.”
PENSION PROBLEMS
Married couples should automatically be in line for each other’s pension benefits when they die but cohabiting partners could miss out.
Kay Ingram, chartered financial planner at retirement adviser LEBC, says pensions rules vary from scheme to scheme: “Cohabiting couples are not entitled to any benefits in some pension schemes.”
The research shows that more than one in five cohabitees believe they would inherit their partner’s final salary pension on death. Even when schemes will pay, the partner must be named on the nomination form, yet one in three has failed to do this.
Ingram also says unmarried couples are not eligible for the new Bereavement Allowance, which replaces the state Widows Pension in April.
NO WILL, NO WAY
Cohabiting couples have no automatic right to a partner’s estate when they die. This could go to other family members, which might force them to sell, say, a jointly owned home.
Despite this, 74 per cent do not have a will, against 61 per cent of married couples. Similarly, they have fewer rights on separation, even if they were in a long-term relationship or had children together. Just 4 per cent of cohabiting couples have an agreement setting out what happens to their finances if they split. Aviva’s research also shows cohabiting couples tend to have a more relaxed attitude to their finances.
They are less likely to own property, but this may reflect the fact they are typically younger than married couples. The planned Cohabitation Rights Bill may strengthen their rights, but Brencher urges couples to plan ahead now.
FOOD producer Bob Clark is aiming to hit the sweet spot with shoppers thanks to the launch of the UK’s first red maple syrup, ready to pour on February 28, Pancake Day.
The robust, caramel-flavoured maple, rare even in its native Quebec, debuts this week in Sainsbury’s, the latest in a range of natural sweeteners and lower sugar sauces the entrepreneur has pioneered since starting his company Clarks nine years ago.
Now the products, including pure and blends of original maple and carob, agave and date syrups, sell to over 150 customers in markets spanning retail, food service, industrial and export.
Turnover grew 24 per cent last year to £8million, as Clark and his team of 35 in Newport, South Wales, added a third production line in the factory and secured their slot as Britain’s leading maple syrup supplier.
Clark had to exploit a gap in the market for an affordable version of the syrup in the wake of rising prices: “A poor harvest and a weak pound had contributed. My solution was a blend with Mediterranean carob that maintained maple’s rich flavour but lowered the cost.”
However, it was the new format he introduced that transformed its commercial potential and won over that most precious of commodities, new customers who had never bought maple before. “All the syrup
‘Maple syrup in squeezy bottles was a breakthrough’