The Family and Taxation
It is not uncommon for a client to telephone me to ask, “I am about to get married. Are there any tax advantages?” A number of years ago the answer was certainly yes because of the married couples allowance – now, except for the wealthy, the answer is probably no.
The most significant tax advantage of being married is that assets can be passed between spouses without any capital gains tax arising. This means that if one party is wealthy whilst the other is not (pre- marriage) they could transfer assets between them once married and then dispose of them reaping the benefit of the second persons exempt band. This effectively doubles the capital gains tax free income they can enjoy.
It is very easy to find disadvantages to being married. For example, if a company director provides a car to his non-working “life partner”, this is almost certainly tax free (provided the value of the car is not too high). However, if his life partner is his wife, then the car would be taxed on the director.
Recently this principal has been extended in what has become known as the Artic Case. The recent Revenue attack on what has been standard family tax planning for many years is overtly anti-family. The result of this approach by the Revenue is to make dividends paid to a non-working non-director wife taxable on the husband (if he is the working director). An easy way to avoid this tax charge is for the couple to divorce; the legislation the Revenue rely on only applies to married couples.
At the local government level there appears to be a policy of giving housing priority to single mothers. Whilst the reasons for this are reasonably clear, it puts them above young married couples who equally deserve a roof over their head. Is it right to encourage mothers to reject the father of their child in order to get a council house? What message does this send to those who uphold traditional family values?
When the laws granting “married” status to same sex couples come in, this will surely further erode any support for married heterosexual couples. The Government has repeatedly stated that they want to strengthen family ties – let’s see them openly demonstrate this with tax policies and direction to the Revenue to promote the family unit rather than the constant devaluing of it, at least in taxation terms, that has been the picture of the last several years.