The Tax Benefits of Being Married in the UK

When most people think of marriage, they picture romance, shared life goals, and perhaps a memorable honeymoon. But there’s another perk that doesn’t get talked about over dinner — potential tax savings.

In the UK, married couples (and those in a civil partnership) can sometimes structure their finances to pay less tax, keep more income, and make better use of allowances. Here’s how.

1. The Marriage Allowance

If one spouse earns less than their Personal Allowance (£12,570 for 2025/26), they can transfer up to £1,260 of it to their higher-earning partner.

The benefit:

• Saves up to £252 per year in tax.

• Can be claimed back for the previous four tax years if you were eligible.

Example: If Sam earns £10,000 and Alex earns £25,000, Sam isn’t using £2,570 of their personal allowance. By transferring £1,260 of it to Alex, Alex’s tax bill is reduced.

2. Transferring Assets to Reduce Tax

Spouses and civil partners can transfer assets like savings, investments, or property between each other without triggering Capital Gains Tax (CGT).

This can be useful when:

• One partner pays tax at a lower rate — income from assets can be taxed more lightly.

• You want to use both partners’ CGT allowances (£3,000 each in 2025/26).

Example: If one spouse is a basic-rate taxpayer and the other is a higher-rate taxpayer, moving dividend-paying shares to the lower-rate spouse can reduce the overall tax bill without triggering any immediate capital gains tax liability.

3. Inheritance Tax (IHT) Advantages

When you’re married or in a civil partnership, any assets left to your spouse are exempt from Inheritance Tax.

Plus:

• Your unused IHT allowance (nil-rate band) can be transferred to your spouse when you die.

• Combined, this means a couple can currently pass on up to £1 million tax-free if they also qualify for the Residence Nil Rate Band.

4. Pension Benefits

Being married can provide more flexibility with pensions:

• You may be able to inherit your spouse’s pension pot without paying tax (rules vary by pension type).

• If one spouse isn’t working, the other can still contribute up to £2,880 per year to their pension, which becomes £3,600 with tax relief.

5. Making the Most of Both Personal Allowances

Marriage doesn’t merge your incomes, but it does give you more planning options. If one spouse earns significantly more, shifting income-producing assets, dividends, or savings to the other can make better use of their allowances and lower tax bands.

6. For Company Directors: Making Your Spouse a Shareholder

If you run your own limited company, sharing ownership with your spouse can be an effective way to split income and reduce the family’s overall tax bill.

How it works:

• You gift or transfer shares in your company to your spouse (usually ordinary shares).

• As a shareholder, they can receive dividends in proportion to their shareholding.

• These dividends can make use of their tax-free Dividend Allowance (£500 for 2025/26) and their basic rate tax band, if they are earning below the higher rate threshold.

Why it’s beneficial:

• If your spouse is a basic-rate taxpayer (or has unused personal allowance), they can take dividends taxed at just 8.75% rather than you taking them at 33.75% or 39.35%.

• Dividends are not subject to National Insurance, so this can be more tax-efficient than paying additional salary.

Example: Alex runs a company and is already a higher-rate taxpayer. Alex’s spouse, Sam, has no other income. By giving Sam 50% of the shares, Sam can receive up to £13,070 in tax-free dividends (using their personal allowance and dividend allowance). This can save thousands of pounds in tax each year.

We specialise in limited company tax planning — including spouse share transfers to reduce tax.

Frequently Asked Questions

1. Can I make my spouse a shareholder after my company is set up?

Yes. You can transfer or gift shares to your spouse at any time, even after the company is established. This must be a genuine transfer, with your spouse having full rights to dividends and voting. The process involves updating the company’s share register, Companies House records, and possibly the Articles of Association. It’s best to get professional advice to avoid unintended tax consequences.

2. Will making my spouse a shareholder always save tax?

Not always. The benefits depend on your spouse’s income and tax position. If your spouse is already a higher-rate taxpayer, there may be little or no advantage. The biggest savings come when your spouse has unused personal allowance or is taxed at a lower rate than you.

3. Is the Marriage Allowance available if my spouse is self-employed?

Yes. Marriage Allowance applies to both employed and self-employed people, as long as one spouse earns less than the Personal Allowance (£12,570 in 2025/26) and the other is a basic-rate taxpayer.

4. Can we backdate a Marriage Allowance claim?

Yes. You can claim for the current tax year and the previous four tax years, as long as you were eligible in each of those years. This can result in a lump-sum tax rebate worth over £1,000 in some cases.

5. Do spouses have to pay Capital Gains Tax when transferring assets between them

Generally, transfers between spouses and civil partners are free of Capital Gains Tax. This rule makes it possible to move income-producing assets to the lower-taxed spouse before selling or receiving income.

6. Can my spouse receive a salary from my company instead of dividends?

Yes, but only if they genuinely work in the business. Salary payments must be commercially justifiable for the work they do, and subject to PAYE and National Insurance. In many cases, dividends are more tax-efficient, but the right choice depends on your business and income mix.

The Bottom Line

Marriage and civil partnerships bring great benefits to peoples lives — and they can also open up legitimate ways to reduce your tax bill. From the Marriage Allowance to dividend-splitting in your company, many couples have multiple opportunities to keep more of what they earn.

The right approach depends on your circumstances, so professional advice is essential to ensure you stay compliant with HMRC rules.

Talk to us today — book a free consultation and find out how much tax you could save as a couple.