Tying the knot? Take the chance to save on tax bills in the future

Saffery Champness, based in Harrogate, is predicting another tough year in 2013, but said there will be ways to use the tax system to avoid the worst of the downturn – including through marriage.

Senior tax manager Tom Roseff said: “It may be possible to create a capital loss by transferring property between themselves by way of a gift prior to the date of marriage.

“This is because where two individuals who are not connected with each other transfer assets between them, the transfer is deemed to take place at current market value.

“Consequently, if you are about to get married but had previously purchased an asset for, say, £10,000 which is now valued at only £6,000, you could gift this to your future spouse now as an advance wedding present. In that case, you would be deemed to have ‘sold’ the asset for £6,000, thereby creating a capital loss in your hands of £4,000.

“Following marriage, a husband and wife can transfer assets between each other on a tax-free basis such that the spouse with the loss can use this to offset any gains arising on sale.”

Adding more money to a pension pot is a well-known method of getting tax relief, but transferring other assets into a pension scheme is also possible.

If they have dropped in value since they were purchased, they will result in a capital loss which can be used to offset personal capital gains in the future.

Mr Roseff also recommended considering offset mortgages as a way to boost personal finances over the coming year, while interest rates remain low.

“Interest rates on bank deposits are now pretty pathetic, ranging from zero to two or three per cent at best, but if you have cash available in the bank and are also paying a fixed-rate mortgage at a rate higher than one per cent, you could ask your bank to set up an offset arrangement,” he said.

“You do not earn any interest on your deposit, but neither do you pay interest on an equivalent amount of your mortgage.”