We're doing it for love, and a few matrimonial tax breaks

National Marriage Week begins today. Melanie Bien asks if we're better off tying the knot
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The Independent Online

National Marriage Week starts today with champions of wedlock in the ascendant. After years of decline, there was an increase in the number of couples getting married in 2003 as 297,000 couples tied the knot in England and Wales, compared with 267,961 in 2000.

National Marriage Week starts today with champions of wedlock in the ascendant. After years of decline, there was an increase in the number of couples getting married in 2003 as 297,000 couples tied the knot in England and Wales, compared with 267,961 in 2000.

That said, the overall picture is not so bright if you consider that there were 447,000 weddings in 1971, according to the Office for National Statistics.

From a purely practical point of view, getting hitched has fewer benefits than in the past since the Government has withdrawn most marriage allowances. The average wedding now costs £14,000, according to the website www.confetti. co.uk, which many couples find is another good reason to carry on cohabiting.

But while it may seem unromantic to think of marriage in terms of tax benefits, they do outweigh those you receive for being single, even if not by much.

"The tax system is not neutral, although it is not like it was a few years ago when there were obvious tax breaks for being married," says John Whiting, tax partner at accountants PricewaterhouseCoopers. "On balance there is a plus to being married, but it is a relatively modest one."

Married couples mainly benefit from the ability to move assets between partners. This is particularly true of inheritance tax (IHT), which is levied at 40 per cent on estates worth more than £255,000. If you are married, your partner doesn't pay IHT on a gift of assets from you after your death, as long as you are both domiciled in Britain.

So if you jointly own a property, and you die, your spouse won't be forced to sell up and move somewhere smaller in order to pay the IHT bill.

"If you are married, your assets pass to your spouse on your death and IHT is only due when the second partner dies," says Philippa Gee at independent financial adviser (IFA) Torquil Clark. "But if you are not married, IHT is payable on the first death as well as the second."

There are also capital gains tax (CGT) benefits in being married: CGT is payable on gains of more than £7,900 in any tax year, but if you are married then you can defer a CGT charge by transferring assets between spouses.

Married couples enjoy pension advantages, too. When one of you dies, the surviving partner is entitled to the spouse's pension benefits. If you aren't married, your partner has no automatic right: you can only sign a form requesting that the trustees ensure your pension is passed on to your partner and then hope for the best.

But while there are a few benefits to being married, most tax credits are assessed on the basis of the family unit rather than on whether or not a couple is married, so the differences are fewer than ever before. Indeed, there is even a benefit to remaining unmarried if you each have your own property.

"One disadvantage for married couples is that only their principal residence is free of CGT when they come to sell it," says Mr Whiting at Pricewaterhouse-Coopers. "Whereas an unmarried couple are allowed one residence each."

So if you get married and each of you has a home, you must nominate one as your main residence. If you sell the other, you must pay CGT on any profit. "But if you stay unmarried, both properties will be free of CGT," says Mr Whiting.

It may even be possible to rent one of the properties out and not pay CGT on the profits on the eventual sale as long as it is managed appropriately. An accountant should be able to advise you in more detail.

One of the biggest benefits of tying the knot is that it makes life a lot simpler. You know where you stand legally, whereas cohabiting couples assume they have more rights than they actually do. The concept of a "common law" husband or wife may be familiar, but there is no such status in law. If you split up, you can have trouble getting your fair share of the joint assets. And if one of you dies without having made a will, your long-term partner may not benefit because he or she is not a blood relative.

If this isn't enough to tempt you down the aisle, unmarried motorists might be interested to know that getting hitched could mean cheaper car cover.

Research from insurer Direct Line reveals that unmarried couples are charged £50 to £100 more than married people for motor cover. Insurers such as Halifax Car Insurance, which hikes premiums for couples who haven't made it legal, says that husbands and wives simply present a lower risk than cohabitees.

So there's your choice: shop around for cheaper car insurance or ask your other half to marry you.

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