Martin Lewis says one marriage benefit can save | European Markets

Martin Lewis has revealed a vital financial benefit of marriage, though it may not be essentially the most romantic tip. Whereas love may be a great cause for tying the knot, there are different sensible issues to contemplate when taking the plunge.

In a clip from ITV 1’s The Martin Lewis Cash Present, the Cash Saving Skilled highlighted the “hidden financial benefits” of marriage, together with substantial financial savings on inheritance tax. Viewers had been astounded to study that marriage may end in financial savings of up to £200,000 on inheritance tax, with Lewis explaining the small print.

“Where marriage really counts is when you die,” he mentioned, prompting awkward laughter from the studio viewers. He clarified: “So the first thing to say. Anything you leave to your spouse is exempt from inheritance tax. So there is no tax to pay on anything that you leave your spouse.”

Nevertheless, Lewis did observe that each events have to be “UK residents” for this to use, in any other case issues “can get complicated”.

He then shared a essential tip: “Any unused inheritance tax allowance passes on to your spouse. You don’t need to do anything to activate it, although, when you die, the executors need to send the documents to HMRC.”

He emphasised that this solely applies to those that are married or in a civil partnership, and residing collectively doesn’t qualify.

Lewis proceeded to show the appreciable impact marriage can have on inheritance tax. “Now imagine…Mr and Mrs Youngatheart have £1 million of assets, including their primary home,” he mentioned.

“There you are, Mr Youngatheart and Mrs Youngatheart. And these are their inheritance tax allowances. They have one each. So look, everybody in their estate can give £325,000, and their inheritance tax is paid on it.

“Above that, you get one other £175,000 should you’re passing in your major home to your direct descendant. In order that’s kids or grandchildren, together with step-children, foster kids, and adopted kids. You move that on; you get an further £175,000 as long as your complete property is not value more than £2 million, the place it is steadily taken away.”

Continuing with his example, Lewis added: “Now, I’ve some very dangerous news, everybody – Mr Youngatheart has handed away. However he leaves all the things to his spouse. Now, as a result of he has left all the things to his spouse, he has not used any of his inheritance tax allowances, and due to this fact, she will get the inheritance tax allowances that he had.”

Spotting a reaction in the crowd, Lewis mentioned an audience member, noting he’d “simply seen his face” and remarking on the considerable “affect” that marital status can have.

He concluded by explaining, “So, now, she will be able to move on £650,000 and one other £350,000 if they have the first residence, that is £1 million. Now, let’s simply think about that they did precisely the identical factor, and so they weren’t married.

“So, you’ve got Mr Youngatheart and Miss Dout. Missed out, there you go,” he chuckled, eliciting laughter from the viewers.

He elaborated on the financial implications: “In that same scenario, he’s left everything to his partner, so he’s used up his inheritance tax allowance. Now, if she leaves everything to the kids, she only has half of that. So that’s £500,000; she’s going to be paying tax on it.”

Lewis then highlighted the potential price of not being married: “Depending on the tax, we could be talking £200,000 of inheritance tax paid because they weren’t married.”

Turning to an viewers member with a jest, Lewis quipped, “Have you got the ring yet?”

For personalised financial advice tailor-made to your particular money scenario, all the time seek the advice of a financial advisor.