## Start – and keep – talking
ThereS no one-size-fits-all answer for whether you should manage your finances jointly, separately or somewhere in the middle.
The most important thing is to have conversations about money – things such as spending, budgeting, debt and saving – early on in your relationship to prevent misunderstandings and arguments later.
According to the counselling service Relate, worries around finance are the biggest strain on couples across the UK, yet, it says, surveys have shown that “a large proportion of us feel unable to actually talk about money with our partners”.
If you are struggling to get a conversation going, you could draw up a written plan. You could suggest you each separately write down how you think you should manage your finances as a couple, and then talk about it.You may have to compromise on some things.
Any arrangements you make should be reviewed every now and again, notably if one person’s circumstances change – for example, if they get a pay rise.
## Think about bills
Moving in together is a big deal and will mean sorting out who’s going to pay for what.
The good news is that some bills should come down. If you where each paying for Netflix, Amazon Prime or other subscriptions, in many cases you will be able to halve those costs. Other costs can be cut, too – for example, some gym chains, such as David Lloyd, offer a discount if you sign up as a couple.
When it comes to gas, electricity and other utility bills, you could split these 50:50 or proportionally based on each person’s income.
Some utility companies will let couples put both people’s names on the bills. This can mean that both p
Pool savings
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The digital bank Revolut recently launched a range of joint savings accounts so couples can “save side by side” and earn up to 4.5% interest.
This may suit those saving towards a shared goal such as a big holiday.
Webb says that while a joint savings account will not affect your credit report, “you still need to be confident that the other person isn’t going to empty the account without your permission”.
A couple who open a joint account currently get up to £170,000 of their cash protected – double the standard £85,000-a-person protection under the Financial Services Compensation Scheme (FSCS). The latter figure will rise to £120,000 from 1 December, so for a couple, the protection will be up to £240,000.
Any interest earned will typically be split 50:50 for income tax purposes.
Max your mortgage borrowing
High house prices mean many couples have little choice but to apply for a mortgage jointly in order to maximise their borrowing power.
As a rough rule of thumb, HSBC would let someone earning £50,000 a year borrow up to £275,000 to buy their first home. But if they applied jointly with a partner who earned £40,000 a year, they could borrow up to £495,000.
The lender will look at both credit records when assessing affordability.
Financial Benefits of Marriage and Civil Partnerships
Being married or in a civil partnership offers several financial advantages, impacting income tax, and inheritance tax. here’s a breakdown of key benefits, current as of late 2023/early 2024:
Marriage Allowance: Transferring Your Personal Allowance
The Marriage Allowance allows the lower earner in a married couple or civil partnership to transfer £1,260 of their personal allowance to their higher-earning spouse or civil partner. The standard personal allowance for the 2023/24 tax year is £12,570.https://www.gov.uk/marriage-allowance
To benefit, the recipient (higher earner) must earn more than £12,570 annually.The transfer is most beneficial for basic rate taxpayers. in Scotland, the higher earner must pay the starter, basic or intermediate rate of income tax to qualify. This transfer can reduce the higher earner’s tax bill by up to £252 per year. https://www.gov.uk/marriage-allowance
You can apply online, and claims can be backdated to the 2021-22 tax year.https://www.gov.uk/apply-marriage-allowance
Inheritance Tax Benefits
Marriage and civil partnerships offer notable advantages regarding inheritance tax. When one spouse or civil partner dies and leaves their entire estate to the other, it is indeed exempt from inheritance tax. https://www.gov.uk/inheritance-tax/gifts-to-spouses-and-civil-partners
the inheritance tax threshold is currently £325,000 for individuals. This increases to £500,000 if a residence is passed down to direct descendants (children or grandchildren). https://www.gov.uk/inheritance-tax/rates-and-thresholds
Moreover, any unused inheritance tax threshold of the first spouse or civil partner to die can be transferred to the surviving partner, effectively doubling their threshold. https://www.gov.uk/inheritance-tax/transferring-tax-allowance-to-spouse-or-civil-partner
Assets,including the family home,can be passed to a husband,wife,or civil partner without incurring inheritance tax.
Pensions
Most pensions automatically pay out to a surviving spouse or civil partner upon the death of the pension holder. Though, for those not married or in a civil partnership, it’s crucial to complete a “nomination of beneficiaries” form. This ensures your pension funds are distributed according to your wishes. Contact your pension provider for the necessary form or to download it.
Disclaimer: Tax laws are subject to change. This information is current as of late 2023/early 2024 and is for general guidance only. It is recommended to consult with a financial advisor for personalized advice.