Tax relief on Wedding gifts
The wedding season runs from May to September and so is now in full swing
And there is tax relief available for guests if they choose to make a gift to the happy couple.
Staying engaged with tax rules has always been important for couples who are planning to get married. For example, a spike in March weddings in the 1950s and 60s has been explained by tax rules at the time – a married man received the full married man’s tax allowance as long as he was married before the end of the tax year. Summer months now take over as the most popular time to get married in England and Wales, however guests can take advantage of tax relief to gifts for the couple.
Tax relief on gifts:
With more and more couples living together before marriage, it is becoming increasingly common for newlyweds to request gifts of cash rather than more traditional gifts such as a kettle or toaster for their new home.
- Whatever the gift, all or part of it will be exempt from inheritance tax (IHT) provided the gift is made on or shortly before the date of the wedding or civil partnership ceremony
- The amount of tax relief will vary depending on the relationship between the donor and the recipient
- Each parent (including step-parents) can give up to £5,000 tax free
- Grandparents can each give up to £2,500
- Any other person (such as relatives and friends) can each give up to £1,000
If the couple wish to give a gift to each other on their wedding day, it will be completely free from Inheritance Tax (IHT) and Capital Gains Tax (CGT).
Capital Gains Tax:
- For couples who both own properties, there will be capital gains tax (CGT) complications once they are married.
- The main residence exemption for CGT only applies to one property per married couple, so you must decide which property the exemption will be used for going forward and the second may eventually be taxable if it is sold for a profit
- HMRC does allow you time to sort out such ‘overlaps’. Of course, an unmarried couple using two houses as ‘homes’ can have one house each, so are much better off
And if the wedding or civil partnership is called off and you still give a gift, it will not be exempt from inheritance tax.
As you can see, getting married can have tax consequences.
For further advice existing clients email us at support@anytime.uk.com or call 03333 110 230
For new enquiries contact us now
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