COVID-19 restrictions has forced thousands of couples to postpone or cancel their big day, and surviving lockdowns together has made many more couples consider making a lifelong commitment to one another, so much so that wedding website Hitched reported that some jewellers saw sales of engagement rings increase by some 40%.*
In 2019 the average cost of a wedding in the UK was estimated to cost couples and their families a whopping £31,974** and we could well see this figure rise further over the next few years. In all likelihood, couples who sought a low key, intimate wedding continued with their plans and got married during the pandemic. Those still waiting to tie the knot are more likely to prefer a larger wedding, complete with a good party and are unlikely to be cutting their guestlists any more than they have to. Because of these factors wedding suppliers are in high demand, which will undoubtedly drive prices upwards in the near future, increasing the financial burden on young couples and their families, who are likely to be helping them.
If you are a parent or a grandparent who is considering gifting some money to help ease the financial burden on a young couple, then you may not believe there is a reason to seek financial advice, but it could be very beneficial to have a quick conversation with an independent financial adviser. This is not so they can dissuade you from providing the gift, but more to make sure that it is given in the correct and most efficient way.
You may already know that there is an annual gifting allowance that can help reduce any potential inheritance tax bill, but were you aware that there is a separate allowance for wedding gifts? Each year you can gift £5,000 to a child or £2,500 to a grandchild or great-grandchild getting married. You may even gift £1,000 to any other friends or family tying the knot. This can all help reduce the taxable value of your estate.
We understand that these figures are unlikely to cover the whole cost of a wedding nowadays, but your adviser will ensure these gifts are recorded correctly to reduce your tax bill later down the line.
It is also of paramount importance that you decide to gift the money from the right source. Many over 55's may consider dipping into their pension to help a loved one pay for their special day, but there is a risk of a significant tax bill or they could inadvertently trigger the money purchase annual allowance (MPAA), which could reduce the amount someone can pay into a pension annually once it has been accessed.
A discussion with an independent financial adviser can ensure that gifts are made in the most tax-efficient method possible without putting at risk your own financial future. Many clients also benefit as they feel talking to an adviser takes some of the emotional element out of the equation, allowing them to make a well-judged decision.
Perhaps you are looking further down the road and are wishing to pay for all or part of a child's wedding; or if you are newly engaged yourself and are looking at effective ways of saving for your big day in the future. In both cases an independent financial adviser can talk to you about putting money aside on a regular basis. A stocks and shares ISA can be a great place to start a longer term savings journey. Within an ISA your money can grow tax efficiently, nor will you have to pay tax when you eventually cash in.
For much younger children you can utilise a junior ISA, but do bear in mind they will have access to the money when they turn 18, at which point they might not have the same priorities that you had hoped for.
For further information, please feel free to get in touch.
Email: hello@taylorwealth.co.uk
Tel: 01245 520 001
The value of any investment will be directly linked to the performance of the underlying funds selected and may fall as well as rise. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are dependent on individual circumstances.
**Hitched, The National Wedding Survey 2019, based on a sample of 2,886 representative adults across the UK
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