You can put a price on love, and marriage can be a bonus – with pitfalls
Love is in the air … or maybe it’s just the spring, but recovery from the recession seems to have made us all more romantic!
Eurostat has reported an increase in couples getting married and, with the average cost of a wedding at €31,000 (see panel), it takes more than dewey-eyed passion to say “I do” these days.
Since the economic recovery, our marriage rate has increased from 4.3 per 1,000 to 4.8, but still a way off from the 5.2 rate during the boom.
It is well known that a strong economy means more couples getting hitched, but from a financial perspective, does it really matter?
This week I’m looking at ways being wed pays … and times when it doesn’t. Can you really put a price on love?
Revenue wouldn’t be known for its beating heart, but in fact working married couples pay less tax than singletons and get better breaks.
Because they’re allowed to share tax credits and can be jointly assessed, if they have only one income or one of the couple earns in a different tax bracket to the other, the savings can amount to over €3,400 per year.
In addition, if one is a stay-at-home-spouse looking after children, they can enjoy the Home Carer Tax credit which is worth €1,500 a year. This is on top of the universal, tax free children’s allowance.
When it comes to paying tax for gifts, inheritances or on profits, married couples fare far better than single people.
There is no tax at all payable between spouses who gift, or leave a bequest to each other. A non-married person can only will tax free assets of €16,250 and a gift of up to €3,000 a year to a partner before they are taxed (at a hefty 33pc) on the balance.
Non-marrieds often have to put insurance and legal arrangements in place for mortgage purposes which incurs extra cost for them.
Even if there is a will, a married spouse is still entitled, by law, to a ‘legal right share’ of 1/3 of a husband or wife’s estate. Without a will, it’s 2/3 or the entire estate if there are no children.
A partner has no entitlements at all, unless it is specifically written into a will, and even then, can be contested if deemed to be unfair to children or an ex-wife.
Capital gains tax is normally paid at 33pc on profits arising from the sale of an asset (eg, property, art, shares, etc).
If you are married, you can transfer gains between spouses or offset losses of one against the other’s tax bill.
Cohabiting couples don’t enjoy the same freedom.
Being married may be a joy for some, but it’s a responsibility too. If you have any debts, you are both jointly responsible for them, even if they’re racked up by one spouse.
Fiscal cheating is a phenomenon which sees gambling debts, loan arrears or non payment of tax all landing on a spouse who may have had no part in it.
Having separate accounts and credit cards may seem like a prudent idea, but you’re paying on the double when it comes to transaction fees and government stamp duty on cards.
A joint account saves money, but you may come to blows in other ways if one of you is a committed saver, and the other a spendthrift!
Maintaining open disclosure, with lots of financial discussions, and setting out a family budget is the answer.
Many company pension schemes offer a ‘spouse’ pension for very little extra premium compared to each buying a separate plan.
This is mainly in place in older occupational and public sector schemes.