Tax breaks for married couples

There has been a lot of discussion in the news this week about David Cameron’s proposed tax breaks for married couples, but in today’s day and age is it appropriate to show preference to this group of society over other, maybe less conventional, families?

I suppose your point of view on this issue will depend very much on your opinion of this long established institution.  However, it is worth noting that there are already many tax advantages to having a valid marriage certificate.

Sharing assets

One of my clients owns a small property letting business which he runs alongside his full time (and some would say very well paid) job.  As a higher rate tax payer he must pay tax on any profits from his property business at 40% while his (up until recently) girlfriend pays basic rate tax on income from her employment.  I say “up until recently” as they were married a few weeks ago and now are able to pass the property assets between them without any Capital Gains Tax implications allowing them to pay tax at 20% on the property business profits.

 

What if your partner dies?

On the other rather more sombre side of the coin, a friend of a friend of mine lost her partner of 15 years a few months back.  Although they were “life partners” with two children they were not married and so, in addition to all the stress of losing her partner and the father of her children, she must also pay inheritance tax on the portion of their house and assets that belonged to him.  This is a massive amount of money to find to be able to keep herself and her children in their family home.  But the issues don’t stop there.  Although she will receive a lump sum from his death in service insurance, there is no widow’s pension as, by the letter of the law, she is not a widow.

 

So maybe Mr Cameron’s current tax breaks for married couples proposals are just the tip of the iceberg.