11 February 2025
This year Brits are expected to spend a whopping £1.5 billion on Valentine’s Day, with three in five – or around 32.7 million people – planning to celebrate, according to Finder. It seems love doesn’t come cheap, but there are steps you can take to help boost your finances as a couple.
While it may not be the first topic of conversation over a candlelit dinner, encouraging an open discussion about your finances as a couple can be very beneficial. Many people are either unaware of or fail to properly utilise the generous benefits available to couples, which could prove costly in the long run.
Making changes now could help create a better financial future for you and your partner – and some may even get you out of finding that last minute gift.
Rosie Hooper, chartered financial planner at Quilter Cheviot, says:
Spousal gifting (for tax purposes)
“This Valentine’s Day, if you are married or in a civil partnership, you can gift as much as you like to your spouse or civil partner without paying tax thanks to a rule known as ‘spousal exemption’. There is no capital gains tax (CGT) to pay on assets you give to your spouse or civil partner, and the usual inheritance tax rules do not apply to those who are married or in a civil partnership.
“Spousal exemption can be a powerful tool that not only allows you to be generous in gifting to your loved one, but it can also help distribute the tax burden between the two of you. For example, if you expect to exceed the CGT exemption, you may wish to transfer the asset to your spouse so they can use their own exemption to realise the gain and prevent you from paying CGT unnecessarily. You could also consider transferring the asset into joint ownership, effectively boosting your CGT exemption from £3,000 to £6,000. If you both have gains to realise, then you will need to manage these appropriately, but using spousal exemptions can help mitigate some of the issues selling an asset can incur.”
Link more than just your current accounts and move assets into your spouse’s name
“As spouses, you are able to make use of linked accounts and investments. Often the conversation about linking finances ends at the convenience of the shared current account and a jointly held mortgage, but spousal linking of investment accounts can help to lower the overall charges paid by each partner. You may also wish to explore the other options available such as joint life cover, car insurance, or other similar products.
“How your money or assets are held, whose name is on the ownership, and who will benefit from it is another key component of good financial planning. However, despite the potential tax benefits, married couples often forget to consider it. Ensuring assets are held in the right name and product, particularly if one partner is on a lower tax band, can help reduce the amount of tax paid to HMRC. For example, exploring whether to top-up a partner’s pension rather than your own can ensure you are receiving the maximum tax relief available between you.”
Boost their Personal Allowance using the Marriage Allowance
“Utilising the Marriage Allowance can be a smart financial move for married couples. It is a simple, yet effective, tax benefit which allows one partner to transfer 10% of their tax-free allowance to their spouse, potentially saving up to £250 every year.
“Understanding how the Marriage Allowance works is key. If you earn less than the personal allowance threshold and your partner is a basic rate taxpayer, you, as the lower earner, can transfer up to 10% of your unused personal allowance to your partner. This transfer reduces the tax the higher earner needs to pay, leading to annual savings that could boost your budget as a couple.”
A will kit – they might thank you later
“It is vitally important that you and your partner have accurate and up-to-date wills in place to ensure your wishes are fulfilled if the worst were to happen. This is particularly important for those who are not married as unfortunately couples do not enjoy the same rights or financial protections as spouses or civil partners on death. For example, unmarried couples without a will run the risk of not automatically inheriting anything on death unless they jointly own property. By contrast, a married partner would inherit all or some of their partner’s estate, even without a will being left.”
Pop the question
“Marriage isn’t for everyone, but popping the question could be one of the shrewdest moves you can make this Valentine’s Day.
“For better or for worse, much of government policy around the tax benefits of personal finances still favour those who are married or in a civil partnership. This tax year, you can pass on up to £175,000 of your property tax-free, which is effectively doubled to £350,000 when combined with the allowance of your spouse or civil partner. That’s layered on top of your inheritance tax allowance – or nil rate band – of £325,000, meaning it is possible to pass on £1m inheritance free as a couple. However, note this is ‘tapered’ at a rate of £1 for every £2 of excess if the overall net value of the estate on death exceeds £2 million.
“This also only works for those with direct descendants to inherit the family home and is capped at the value of the property being inherited (less any mortgage outstanding), while the UK’s six million cohabitees are less fortunate and cannot claim the combined allowances.
“Given the changes announced at the recent budget, particularly government plans for unused pension funds to be included in estates for inheritance tax from April 2027, getting married or entering a civil partnership could soon become even more appealing. Pension assets can generally be passed on to your spouse or civil partner IHT free, so tying the knot is something more and more people may wish to do. It is worth speaking with a financial planner where possible to ensure you understand the changes in the rules and how they might impact you and your partner, as well as your wider family.”
