Pros and cons of joint finances

There are benefits and risks for couples who decide to manage their money together.

Many couples maintain independent finances, but operate one or more joint accounts to cover bills or for savings. But differing attitudes to spending and saving can be a source of tension.

Once you buy a home together, or just open a joint account, your finances become inter-linked. You will then be ‘co-scored’ when applying for credit, and a partner’s poorer credit score can impact on your rating. If you have a shared mortgage or loan, you will also be liable for the whole debt if your partner can’t, or won’t, contribute to the repayments.

Switching Investments

Where one partner is a basic rate taxpayer or non-taxpayer and the other pays income tax at a higher rate, it could be worth switching savings or investments to the lower earner to reduce the overall tax payable. Husbands, wives and civil partners can normally transfer assets freely between each other without incurring tax on any gains realised by the gift.

Higher earners can choose to contribute to the pension of a lower-earning spouse, with the amount of tax relief available the greater of £3,600 or their relevant UK earnings. This could help couples make best use of both of their personal allowances for income tax in retirement.  

One word of warning: if an account is also in a partner’s name, they are then legally entitled to the money. Trust is key. Couples must be comfortable discussing their finances.

The Financial Conduct Authority does not regulate tax advice.

Levels and bases of taxation and tax reliefs are subject to change and their value depends on individual circumstances.

The value of your investment can go down as well as up and you may not get back the full amount you invested.


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