Planning for your special day? A wedding is a celebration of love and commitment, surrounded by family and friends. And while weddings aren’t cheap – with the average cost in the UK is now over £24,000 – there are some financial benefits of marriage. So, thinking ahead and understand the financial rules around marriage could help save you thousands.
How to protect your finances in marriage
It’s not the most romantic part of getting married, but financial planning before marriage is essential. One way to protect your assets is by considering a prenuptial agreement (or prenup).
A prenup is a written contract created and signed by two people before they commit to marriage. It details a list of assets and debts, and spells out each person’s rights during the marriage and what would happen in the event of divorce.
While you might not want to think about divorce and the impact it could have on your life, smart financial planning is all about considering every eventuality. Sadly, divorce is more common than you might think. In the UK, the percentage of marriages ending in divorce is around 41%.
How to talk about your finances before and after marriage
Open communication is key. How to talk about finances before marriage is a topic many couples avoid, but it’s crucial for long-term harmony. Discussing short-term debt (e.g. credit cards), long-term debt (like student loans), earnings, and savings helps build a clear picture of your financial position.
Once married, combining finances after marriage can be a big step. Whether you choose joint accounts or keep things separate, understanding how to manage finances after marriage is vital. Honesty and transparency are the foundation of successful financial planning after marriage.
3 financial benefits of marriage
Getting married can leave a big financial hole in your pocket, but once the wedding is paid for, there are several benefits of marriage financially:
1. Transfers between spouses
One major advantage is that spouses can transfer money and assets between themselves tax free, helping to reduce your overall tax bill. For example, if one spouse is a higher earner and the other is a basic rate taxpayer, transferring investments can result in lower tax on dividend and capital gains tax.
The dividend allowance for the 2024/25 tax year is £500. Any dividends above this are taxed at 8.75% for basic rate taxpayers, and at 33.75% or 39.35% for higher and additional rate taxpayers respectively.
The same rules apply for capital gains. It’s possible to transfer assets to your spouse without crystalising a gain for tax purposes. Your spouse could then use their capital gain tax-free allowance, currently £3,000 for the 2025/2026 tax year, or crystalise a gain a lower rate if they are a basic rate taxpayer. The capital gains tax rate for basic taxpayers is 18% and 24% for higher or additional taxpayers.
2. Wedding gifts from parents or grandparents
Family contributions can help fund your big day and reduce their inheritance tax liability. Each tax year, individuals can make tax-free gifts to someone getting married or entering a civil partnership:
- £5,000 to a child
- £2,500 to a grandchild or great-grandchild
- £1,000 to any other person
These allowances are per person, so a mother and father could gift £10,000 to a child, which would fall outside their estate for inheritance tax purposes. This can be combined with the annual gift exemption of £3,000 for even greater tax efficiency.
3. Access to the nil rate tax band
Married couples benefit from the nil rate band for inheritance tax, allowing them to pass on assets up to a certain threshold without incurring tax. The inheritance tax (IHT) threshold for married couples in the 2025/26 tax year is £650,000, providing the first person to pass away leaves all of their assets to their surviving spouse. There is no inheritance tax to pay on transfers between married couples.
Read more: how does inheritance tax work?
Plan your future with a financial planner
A financial planner can help you develop a bespoke plan that covers your wedding and sets you up for a secure financial future. Our experts offer tailored advice to ensure your wedding spending aligns with your long-term goals, reinforcing the importance of a solid wedding budget plan.
Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.
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