Martin Lewis has warned people about second marriages (Image: ITVX)
Money expert Martin Lewis has issued a warning to people who get married for a second time because it may end up leaving you with a big inheritance tax bill.
Martin returned on the latest episode of The Martin Lewis Money Show Live on ITV last Tuesday, where he took his viewers through all of the tax advantages of marriage.
Being married, or in a civil partnership, can give you all sorts of inheritance tax perks, including an unlimited inheritance tax allowance as long as you’re leaving everything to your husband or wife, Martin explained.
Not only this, but you can also pass on your unused tax allowances. For example, everyone gets to pass on £325,000 tax-free when they die (or £500,000 including a primary residence property).
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If you pass all this to your spouse, then they add it to their entitlements when they die, and they can leave £700,000 (or £1m) to their benefactors, such as your children, using both sets of entitlements combined.
However, there is one increasingly common scenario in which you could actually be stung for inheritance tax for getting married and it applies to people on their second (or third, or fourth…) marriages.
According to recent ONS statistics, one in four men and one in 10 women in the UK who get married have been married before. Hall Brown Family Law says that over-50s men, in particular, are remarrying more than before, with the numbers increasing by a third in the pas decade.
While this is great for old romantics, it can have a significant downside when it comes to inheritance tax.
Martin Lewis explained: “Unused tax allowances can only be inherited once. So if you passed on a spouse’s allowance, you can’t pass it on to a new spouse.
“So if [stand-in co-host] Jenny and I, both our spouses pass away, we’ve both got £1m of unused allowance, if we were then to get married, I lose half a million pounds of mine and she loses half a million pounds of her unused inheritance tax allowance.
“So actually while marriage is very beneficial for most, in these scenarios, remarrying may actually cost you under inheritance tax laws.”
Martin then added: “Look, if you’ve got £2m in assets anyway, go get advice on this because it is complicated. I’ve simplified it, but it is complicated.”
The Martin Lewis Money Show Live February 10 episode is still available to watch via ITVX.
