Money and love can be a dangerous combination.
If you and your partner share the same attitude to money, great, however in my experience I have seen that many relationships are blighted by arguments about money and reaching a compromise isn’t always easy. Engaging the help of an expert who will work together with you to help you reach your financial goals might be a good idea.
In many relationships you can find that one may be a saver and the other a spender but that doesn’t mean a compromise isn’t possible. Many couples break up over money, don’t keep money secrets from your partner, pick an appropriate time and be honest. Ensure there is full disclosure of the past and a joint approach to money matters in the future.
Share out the chores of paying household bills, filing paperwork, saving money and arranging loans, investment decisions and dealing with bank, the Revenue Commissioners and insurance companies etc. While administration duties can be shared it is crucial that decisions are made together.
Maintain your independence; a joint account is fine for joint expenditure but it is a good idea to keep an account for yourself. Compromise is key; if you work together you will reach your objectives sooner.
Educate your children about finance; it is never too early to start.
Tax consequences on marriage
- Assets may be transferred between husband and wife without being subject to capital gains tax.
- Capital losses made by one spouse may be used by the other spouse to reduce a capital gains tax bill.
- Gifts or inheritances given by one spouse to another are completely free of capital acquisitions tax.
- Married couples do not have to pay stamp duty when they transfer assets from one to another.
- If you are self employed there are tax advantages by employing your spouse in the business.
A married couple or those in a civil partnership can choose to be taxed jointly, separately or as single persons.
- For those that opt for joint assessment they are entitled to a married/civil partner’s tax credit which is double the single persons tax credit, the Home Carer’s tax credit, and double a single persons mortgage interest relief on their PPR.
- Trading losses incurred by one spouse/civil partner can be set against income of the other spouse/civil partner.
- Double the age tax credit, even though only one spouse/civil partner may be over 65 years.
- Regarding CGT, capital losses available to one spouse/civil partner can be used by the other spouse/civil partner.
- Transfer of assets also between spouses/civil partners is exempt from stamp duty.
When you marry
Once you get married or enter into a civil partnership you should inform the tax office of the date of the marriage or civil partnership, quoting your PPS number and that of your spouse/civil partner. Watch out for the year of marriage, in this year you and your spouse/civil partner are treated as two single people for income tax purposes. However if you pay more tax than that which would have been payable as a couple who are married or in a civil partnership you can claim a refund.
A claim can also be made for separate assessment, this claim must be made in writing. Where separate assessment is claimed the tax credits are divided between the spouses/civil partners. If at the end of the tax year, the total tax payable under separate assessments is greater than the amount payable if an application for separate assessment has not been made, you can apply for a refund. This assessment can be withdrawn in the future by applying to Revenue in writing.
Separate treatment means each spouse/civil partner is treated as a single person with no right of transfer of allowances or relief between spouses/civil partners. Single assessment is normally only beneficial where one spouse/civil partner has foreign employment income.
Other financial items on marriage
If you have children or someone depending on you for financial support then life cover should be a priority.
When you complete an application for life cover – in fact for any sort of insurance – the onus is on you to advise the insurer of any facts which may affect the risk they are undertaking. You will be asked to sign a declaration to the effect that you haven’t withheld any relevant information. If you lie or withhold information your policy may end up being invalid and a complete waste of your money.
Quitting smoking can be beneficial not just for your health. If you are free of the habit for over 12 months, it could mean up to a 50% reduction in your monthly life cover premiums.
Review your needs regularly, every two to three years make sure you have adequate protection and that you haven’t been sold cover that you don’t need.
Check out my tips for creating a household budget
For a confidential consultation following marriage regarding your taxes Book A Call or email caroline@charlespcrowley.com