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Tax for Couples

Married couples, civil partners

All couples, whether they are married, in a civil partnership or cohabiting are taxed as individuals. Every person is entitled to the first slice of their income free of tax – this is called the ‘personal allowance’.

In the 2014-2015 tax year everyone under 65 has a personal allowance of £10,000 (during the tax year 2013-2014, the allowance was £9,440).

However you can't transfer any unused portion of your personal allowance to your partner if your income is less than this amount.

Married couple’s allowance

The married couple’s allowance, which reduces the amount of tax you pay, only applies if you or your spouse or civil partner was born before 6 April 1935.

You can find out more about the married couples allowance in our guide to tax and allowances for older people.

Living together

The crucial differences you need to be aware of if you're cohabiting are:

• The surviving partner has no automatic right of inheritance when one of you dies

• If you don't make a will, relatives rather than your partner inherit

• You may have to pay capital gains tax or inheritance tax if you transfer assets between you

• You're not entitled to the married couple's allowance even if you or your partner were born before 6 April 1935

• You can't claim any of the state bereavement benefits available to widows or widowers

Separated or divorced

You don't pay tax on payments that you receive under a maintenance agreement.

You can claim tax relief on maintenance payments you make if you or your ex-partner were born before 6 April 1935. The most you can claim is the lower of either the amount you pay or £3,140 in 2014-15 (£3,040 in 2013-14)

Relief is given as a 10% reduction in your tax bill, giving a maximum reduction of £100 for 2014-2015.

Your investments

If one of you pays tax at a higher rate, a simple way to save tax is to transfer some investments to the person paying the lower rate.

The transfer has to be a genuine gift – you can't demand the money back if you change your mind.

Joint income

If you have investments in joint names, you'll each automatically pay tax on half the income even if you own them in unequal shares.
If you prefer to be taxed on the actual proportion you own, complete Form 17 (available from HM Revenue & Customs or your tax office). You can't have the income taxed on an unequal basis just because you think it would be to your advantage – the investment must truly be held in unequal shares. Jointly-owned shares in your own company are always taxed in line with the proportions in which you own them.

Tip: Transferring assets to your partner may save tax