6 ways married couples can cut taxes and maximise savings

Christmas may be a popular time to pop the question, but marriage rates overall are in decline. But couples who don’t legally tie the knot are missing out on potential perks.

The latest Office for National Statistics data showed an 8.6% fall in marriages and civil partnerships in England and Wales in 2023. Those who do decide to make it official may be surprised by some of the financial advantages that come with matrimony.

Married couples and civil partners, for example, are allowed to pass their possessions and assets to each other tax-free, regardless of the amount. Here, we run through seven ways saying 'I do' could save you money.

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1. You might qualify for marriage allowance

Marriage allowance is a tax perk for couples who are married or in a civil partnership. It allows a person to transfer £1,260 of their personal allowance to their partner who earns more than them. That amount is then effectively added to the higher earner's personal allowance. 

To be eligible, one partner must be a non-taxpayer – in other words, earning less than the personal allowance (£12,570) – and their spouse must be paying the basic 20% rate of tax. This means they earn less than £50,270. Income tax rates and bands are different in Scotland, so the higher-earning partner must earn less than £43,662.

You'll save up to £252 in tax in 2025-26 – but it's also possible to backdate your claim for up to four tax years, providing you were eligible during those periods.

It’s easy and free to apply through HMRC's website. You’ll need to have both of your National Insurance numbers handy, as well as two proofs of identity such as a P60, recent payslips or passport details.

There's also the married couple's allowance (MCA), which allows you or your spouse to reduce a tax bill by up to 10%, but this only applies to couples where one or both partners were born before 5 April 1935.

• Find out more: Marriage Allowance and MCA explained

2. You could sidestep inheritance tax (IHT)

Anything over £325,000 in your estate after death is subject to IHT, charged at 40%. The £325,000 allowance – called the 'nil-rate band' – rises to £500,000 for direct descendants such as children, if a property that was the deceased's main home is included in the estate.

Rising property prices and new rules bringing unused pension funds into the scope of IHT from April 2027 mean a growing number of people who were previously unaffected by the levy may soon find their estates exceed their tax-free allowances.

Getting married can help you sidestep or reduce the IHT bill on your estate.

If you're the surviving partner, your spouse's tax-free allowance will be added to your own. In 2025-26, most married couples or civil partners can pass on up to £650,000, or £1m if your estate includes your home. 

This effectively doubles the amount the surviving partner can leave behind tax-free without the need for special tax planning.

• Find out more: inheritance tax rates, thresholds and who pays

3. You might be able to cut a capital gains tax bill

If you make a financial gain selling a property (that's not your main home) or asset, you might need to pay capital gains tax (CGT). 

The amount of profit you can make before any tax is payable is £3,000 in 2025-26. The tax rate you pay after the CGT tax-free allowance is exceeded depends on your income. You'll pay 18% as a basic-rate taxpayer, or 24% if you pay a higher rate of tax. 

So long as you are married or in a civil partnership, and live together, you can pass assets or possessions to each other without facing a CGT charge. 

There are a couple of ways this can be beneficial:

Making the most of both allowances

Married couples each have their own CGT allowances, which means you have a combined household allowance of £6,000. 

It's possible to transfer assets between one another to make the most of both spouses' annual CGT allowance. Transferring an asset into your joint names will have the same effect.

So, say you stand to make £5,000 in profit from the sale of a painting, but only have £1,000 left of your allowance. The total amount you'd need to pay CGT on will be £4,000. But if you transferred the painting to your spouse, who still has the full allowance, the total taxable gain would be a much lower £2,000.

Switching to a lower tax rate

Another way to benefit is if your spouse pays a lower rate of tax than you. For example, married couple Brian and Daisy want to sell shares that will generate a total capital gain of £10,000. Brian is a higher-rate taxpayer, and Daisy is a basic-rate taxpayer. Each still has the full CGT tax-free allowance of £3,000.

Brian's CGT bill - charged at 24% - would be £1,680. But if the asset was passed to Daisy, who pays 18%, she would only be charged £1,260. That's £420 less.

If you choose to transfer any of your assets to your partner, bear in mind that if they later sell the asset, they'll be charged based on the gain made during the period it was owned by you, rather than since the asset was passed to your partner.

• Find out more: capital gains tax explained

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4. You might be able to reduce tax on savings

Couples can minimise the tax paid on returns by making use of both their personal savings allowances (PSA). Basic-rate taxpayers can currently earn up to £1,000 in interest tax-free, higher-rate taxpayers £500, and additional-rate taxpayers get no allowance.

In the case of joint savings accounts, interest income is split equally between account holders. Tax is paid at the rate which applies to each saver on anything over their respective PSAs.

If one of you pays tax at a higher rate, a simple way to protect more of your interest income from the taxman is to transfer some of your savings to the person paying the lower rate. However, the transfer has to be a genuine gift. You can't demand the money back if you change your mind.

This strategy is likely to be even more important over the next few years. From April 2027, income tax on savings interest will increase by two percentage points for both basic and higher-rate taxpayers. Plus, a freeze on income tax thresholds until 2031 means more people will find themselves pushed into higher tax bands.

• Find out more: tax on savings and investments

5. You could boost your Isa allowance

Isas allow you to shield savings interest income from HMRC. The annual tax-free allowance for 2025-26 is £20,000. 

If you've used up your annual allowance, but your spouse or civil partner hasn't, you can pay into their account instead, effectively allowing you to save up £40,000 tax-free. 

Married couples and civil partners can also benefit from a tactic called Bed and Isa. It's a knotty topic, so let's break it down into steps:

• If one partner has assets that are subject to CGT, they can make a tax-free transfer to their other half who has some of their Isa allowance left.
• The receiving partner then sells those investments and immediately buys them back within a stocks and shares Isa.
• The investments are now shielded from the taxman, up to £20,000. 

6. You can pass on tax-free Isa pots

Like money in traditional savings accounts, Isas form part of your estate when you die.

The surviving spouse can inherit the funds invested in these accounts without triggering an IHT bill and benefit from the extra tax protections these accounts offer. However, that only applies if they are married or in a civil partnership. Otherwise, the money will lose its tax-free status. 

Since 3 December 2014, bereaved spouses and civil partners have also been allowed to re-invest cash and investments held in their partner's Isa. The allowance is called an Additional Permitted Subscription (APS).

• Find out more: cash Isa rules and allowances