How a married couple can reduce tax in the UK
Many tax reliefs and allowances are well-known, however some are more complicated. If you are a high earner or your overall household income is high, you will need to be smart and plan ahead to make sure you utilise tax reliefs and allowances efficiently.
For married couples, there are several opportunities that you can take advantage of to reduce your overall tax bill. Yet many couples are unaware of these reliefs. Below are some allowances that married couples should consider.
It is important to note that tax rules and allowances change frequently and having a financial adviser to help will make sure that you are aware of the latest legislation and how it could impact your personal circumstances.
Book a no-obligation meeting online now or call 0117 456 5921.
The marriage allowance
Married couples and civil partners may be able to transfer some of their income tax personal allowance to their spouse.
If you earn under the £12,570 personal allowance and your spouse is a basic rate taxpayer, you can gift £1,260 of your allowance to your spouse. This could save them 20% tax on the amount of £1,260. A potential saving of up to £252. You can also backdate this for four tax years.
Tax-free transfers between spouses in the UK
Savings, cash, investments and property can be transferred between spouses which means that couples can restructure their finances and income to maximise tax efficiency. For savings and cash this means that both partners can maximise their personal savings allowance and pay less tax between them.
For investments, these enables both couples to maximise their CGT allowances.
Being tactical about ISA and pension contributions
ISAs and Pensions are popular ways to save due to the tax advantages of accounts. Adults have an annual ISA allowance of £20,000 (for the 2025/26 tax year). ISAs are tax-efficient as any growth is not subject to income or capital gains tax.
Even if you have fully utilised your ISA allowance, you should also make sure your partner has utilised their own allowance.
A pension benefits from tax-relief on contributions. Most people can contribute up to £60,000 per year or up to their annual salary if it is lower and receive tax relief. Married couples cannot share allowances but you can both make sure you have utilised as much of the allowance as possible.
You might also be able to carry forward any unused pension allowance from the previous three tax years and contribute a lump sum if you are able to.
Plan to mitigate Inheritance Tax
Inheritance Tax is currently charged at 40% on anything over the value of £325,000 in your estate. Each person can also qualify for the Residence Nil Rate Band of £175,000 (£350,000 per couple) if they leave their house to a direct descendant such as child or grandchild.
Inheritance Tax is easier for married couples to reduce as they can combine their allowances. Each couple can shelter up to £1 million of assets from Inheritance Tax. This is the combined £650,000 nil rate band of £325,000 per person. If your estate is worth more than £1,000,000 or if you will not qualify for the Residence Nil Rate Band, there is some tax planning you can do in advance to mitigate your Inheritance Tax liability meaning you can leave more to your loved ones.
Everyone has a gifting allowance of £3,000 per year that they can gift to anyone they choose. This is immediately outside of the estate for Inheritance Tax purposes. Each person also has an unlimited number of small gifts up to £250 they can use in each tax year. However, you cannot use more than one of the allowances to gift to the same person.
There are many other gifting allowances and solutions to Inheritance Tax, some of which are more complex.
To find out more about gifting and mitigating Inheritance Tax, you can book a no-obligation meeting with a financial adviser at Borealis Financial Planning. Book online now or call 0117 456 5921.
Get expert tax advice
The easiest way to make sure you are utilising all of your tax allowances is to speak to a financial adviser at Borealis Financial Planning. There is no ‘one size fits all’ solution and your financial adviser will take the time to fully understand your individual circumstances and goals and create a tax-efficient plan for you.
Book online now or call 0117 456 5921.
The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
SJP approved 22/01/2026