In a recent viral update, Martin Lewis (the Money Saving Expert) issued a stark warning to cohabiting couples: not being married could be your biggest financial mistake. For many, the word “marriage” evokes thoughts of romance and commitment. However, from a legal and tax perspective, marriage is one of the most powerful “tax shields” available in the UK.
At GLP Solicitors, we often see families shocked by unexpected tax bills that could have been entirely avoided with simple estate planning. In this guide, we break down Martin’s latest advice, explain the “taper” traps, and show you how to protect your home for the next generation.
1. The £240,000 marriage benefit
The headline figure of £240,000 comes from a simple but brutal reality of UK tax law. If you are married or in a civil partnership, you benefit from the Spousal Exemption.
- The rule: You can leave 100% of your assets to your spouse tax-free.
- The unmarried trap: If you live together but aren’t married, you are treated as “strangers” by HMRC. You only have an individual tax-free allowance of £325,000 (the Nil-Rate Band).+1
The math: If one partner leaves a £1 million estate to a long-term cohabiting partner, they could face a 40% tax bill on the amount over the threshold. By being married, that bill potentially drops to zero.
2. Passing on the family home: the £175,000 “extra”
Martin Lewis highlighted the Residence Nil-Rate Band (RNRB). This is an additional £175,000 allowance given if you leave your main residence to a direct descendant (children, grandchildren, etc.).
When you combine the standard £325,000 allowance with the £175,000 property allowance, an individual can pass on £500,000 tax-free. For a married couple, these allowances are transferable, meaning a surviving spouse can pass on up to £1 million without paying a penny in Inheritance Tax (IHT).
If you find yourself in this bracket, professional Wills and Probate advice is essential to ensure you aren’t paying more than necessary.
3. The “Taper” Trap: is your estate over £2 million?
Martin Lewis added a crucial caveat that many people miss: the Taper Threshold. The £175,000 property allowance isn’t a guarantee for everyone.
- The limit: For estates worth more than £2 million, the allowance begins to “taper” away.
- The rate: You lose £1 of the allowance for every £2 your estate is over the £2m mark.
- The cliff: Once an estate reaches roughly £2.35 million, the extra property allowance is gone entirely.
4. Gifting: the 7-year rule and giving from income
The most common way to reduce an IHT bill is by gifting assets while you are still alive.
- The 7-year rule: If you give away a gift “without reservation” (meaning you don’t still benefit from it, like living in the house you gave away) and live for 7 more years, that gift is usually tax-free.
- Giving out of income: As Martin pointed out, you can make regular gifts from your surplus income (money that doesn’t affect your standard of living) which are immediately exempt from IHT.
Summary Table: IHT at a glance
| Status | Max Tax-Free Allowance | Key Requirement |
| Single / Cohabiting | £325,000 – £500,000 | Higher limit only if leaving a house to direct descendants. |
| Married / Civil Partners | Up to £1 Million | Allowances are transferred to the surviving partner. |
| Estates > £2 Million | Tapered | The property allowance reduces by £1 for every £2 over. |
How GLP Solicitors can help
Inheritance Tax is often called a “voluntary tax” because, with the right legal structure, much of it can be mitigated. Whether you need to update your Will to reflect your marital status or you want to discuss a gifting strategy to protect your children’s inheritance, our team is here to help.
Don’t leave your family’s future to chance. Contact GLP Solicitors today for a clear, jargon-free consultation on your estate planning.
Discover more on: How Inheritance Tax works: thresholds, rules and allowances: Overview – GOV.UK