We’re sure that any lady planning to propose to her partner today is doing so because she loves them… But what about the tax savings that can be enjoyed by married couples? Are they enough to encourage a leap year engagement?
The tax experts at the Institute of Chartered Accountants in England and Wales (ICAEW) have come up with the incentives that couples can take advantage of if they take the leap into wedlock.
Firstly is the suitably named marriage allowance, which lets married couples or those in civil partnerships transfer a lump sum of their personal allowance to reduce the higher earner’s tax bill.
Couples can transfer up to £1,060, saving £212 in tax.
However, to be eligible, the lower-paid partner must earn less than their personal allowance, which is currently £10,600, and the higher-paid partner must be taxed at the basic rate of 20%.
If it’s property tax rather than tax on your income that you’re concerned about, married or engaged couples will be pleased to know that individuals can pass property that would otherwise be charged Capital Gains Tax (CGT) on to their spouse, without paying any tax.
This means that married couples can essentially access a tax-free allowance on capital gains of £22,200, rather than the £11,100 they would have as singletons.
Unfortunately, these savings only apply to married couples, and weddings can cost tens of thousands of pounds.
If you need a helping hand in making your way down the aisle, your friends and family can contribute to the cost of your big day without paying inheritance tax.
Each parent can gift up to £5,000, each grandparent up to £2,500, and everyone else up to £1,000 without being charged tax. However, the gift must be given either on or shortly before the date of the ceremony.
If you do propose today and your partner refuses, don’t fear: Anita Monteith, the Technical Tax Manager at the ICAEW, has some good news.
“If these tax breaks aren’t enough to tempt your man to walk down the aisle, then according to tradition, there is a penalty to pay,” she explains. “Any man refusing a 29th February proposal should buy the woman in question a silk dress, or some traditions even dictate that he should buy her 12 pairs of gloves – the intention being to hide the embarrassment of having no engagement ring.”1
So it’s not all bad news then!