Planning as a Couple: Joint Finances and Shared Goals

Financial planning as a couple creates opportunities that are not available to individuals — from doubling ISA allowances to optimising whose pension to prioritise. This guide covers the key strategies for couples planning together.

Double Your Tax-Free Allowances

As a couple, you have access to twice the tax-efficient savings capacity:

• ISAs — £40,000 combined annual allowance (£20,000 each)
• Pensions — up to £120,000 combined annual allowance (£60,000 each)
• Capital Gains Tax — £6,000 combined annual exempt amount (£3,000 each)

Even if one partner does not work, they can still contribute up to £2,880 net (grossed up to £3,600 with tax relief) to a personal pension, and use their full ISA allowance with gifted money from their spouse. Our financial planning tools help you model the combined tax efficiency of different contribution strategies.

Whose Pension to Prioritise

If you cannot maximise both pensions, consider directing extra contributions to the partner who:

• Is in the higher tax band — they receive more tax relief per pound contributed
• Has an employer matching scheme — capture free money first
• Is further from the Lump Sum Allowance limits — to avoid tax charges on large tax-free lump sums
• Has the smaller pension pot — if you want more balanced retirement income to make use of both Personal Allowances

Having broadly similar pension incomes in retirement means you can both use your £12,570 Personal Allowance, potentially saving significant income tax compared to one partner having a very large pension and the other very little.

Marriage Allowance

If one partner earns below £12,570 and the other is a basic rate taxpayer, you can transfer £1,260 of the lower earner’s Personal Allowance to the higher earner, saving up to £252 per year. You can backdate claims for up to four tax years.

This is separate from the married couple’s allowance (which only applies if one of you was born before 6 April 1935).

Inheritance Tax Planning for Couples

Married couples and civil partners benefit from important IHT rules:

• Assets pass between spouses completely free of IHT
• Any unused nil-rate band (£325,000) transfers to the surviving spouse
• Any unused residence nil-rate band (£175,000) also transfers
• Combined potential tax-free threshold: £1,000,000

However, leaving everything to your spouse simply defers the IHT bill to the second death. A balanced approach might include using some of the first spouse’s nil-rate band through gifts to children or trusts. Use our estate planning tools to model combined IHT exposure, or speak to a regulated adviser for personalised guidance.

Planning for the Unexpected

Couples should also consider:

• Life insurance — particularly if you have a mortgage, children, or one income is much larger than the other
• Wills — without a will, your assets may not go where you intend, especially for unmarried partners who have no automatic inheritance rights
• Pension nominations — check that your pension death benefit nominations are up to date
• Powers of attorney — consider Lasting Powers of Attorney for both health and financial decisions