Married Couples Tax Planning 2025-26

In the UK, married couples and civil partners are generally treated as independent taxpayers. Each individual is responsible for their own tax affairs and receives their own personal tax allowances.

Unlike some countries, the UK tax system does not automatically combine a couple’s income, nor does it allow spouses to share tax bands. In most circumstances, personal allowances cannot be transferred between spouses, although there are some exceptions, including the Marriage Allowance.

However, careful financial planning can help couples make full use of:

• Personal Allowances
• Personal Savings Allowances
• Dividend Allowances
• Basic Rate Tax Bands

By ensuring income-producing assets are held in the most tax-efficient way, couples may be able to reduce exposure to higher and additional rate tax charges while also improving their inheritance tax position.

One of the most effective tax planning strategies for married couples is ensuring income is distributed as evenly as possible between spouses.

Where one spouse receives the majority of investment income while the other has little or no income, valuable tax allowances can be wasted.

During the 2025/26 tax year, David and Laura receive:

• £50,000 of savings income
• £50,000 of dividend income
• No other income

If the income is split equally between them, their combined tax bill is approximately £6,860.

However, if one spouse receives the entire £100,000 income while the other receives nothing, their combined tax bill rises to £23,092.

The difference? An additional £16,232 in tax.

This example highlights how reviewing ownership of investments and income-producing assets can result in significant tax savings.

The Marriage Allowance is a valuable but often overlooked tax relief available to eligible married couples and civil partners.

The allowance enables one spouse or civil partner to transfer part of their Personal Allowance to the other, helping to reduce the couple’s overall tax bill.

You may qualify if:

• One spouse has income below their Personal Allowance.
• The other spouse pays Income Tax at the basic rate.
• Neither spouse pays Higher Rate or Additional Rate Income Tax.

For the 2025/26 tax year, up to £1,260 of unused Personal Allowance can be transferred.

As the relief is given as a basic rate tax reduction, the receiving spouse can save up to £252 per year.

Don’t Forget Previous Years

Many couples are unaware that Marriage Allowance claims can be backdated.

If you were eligible but did not claim, it may be possible to backdate your application by up to four tax years and receive a refund from HMRC.

Tax Tip: If you think you may have missed out on Marriage Allowance in previous years, contact FWCA and we’ll be happy to review your eligibility.

Some older taxpayers may still qualify for Married Couple’s Allowance, which is different from the Marriage Allowance.

This relief is generally only available where at least one spouse or civil partner was born before 6 April 1935. As relatively few taxpayers now qualify, it is not covered in detail here.

Many married couples own assets jointly, including property, savings and investments. The way these assets are owned can have important tax consequences.

For Income Tax purposes, income generated from jointly owned assets is normally treated as being shared equally between spouses, regardless of their actual ownership percentage.

However, couples may be able to make an election to HMRC to have the income taxed according to their actual beneficial ownership shares instead.

This can be particularly useful where one spouse is a lower-rate taxpayer and the other is subject to higher rates of tax.

Different rules apply to shares in close companies, which include most small private and family-owned businesses.

In these cases, dividends are taxed based on the proportion of shares owned by each spouse, rather than being automatically split equally.

When reviewing asset ownership between spouses, it is important to consider more than just Income Tax.

A well-structured arrangement can also offer advantages for:

• Capital Gains Tax (CGT)
• Inheritance Tax (IHT)
• Estate planning
• Succession planning

Regular reviews can help ensure family wealth is held in the most tax-efficient manner while remaining aligned with your financial objectives.

Every family’s financial situation is different, and the most effective tax planning strategy will depend on your income sources, investments and long-term goals.

At FWCA, we can help married couples and civil partners identify opportunities to reduce their tax liabilities and maximise available allowances while remaining fully compliant with HMRC requirements.

Contact our team today on 01384 376 964 to discuss smarter tax planning for you and your family.

Folkes Worton LLP Chartered Accountants
Accounting for the Future