Shocker: Meghan Markle will probably still have to pay US tax even as the wife of a prince. The IRS is notorious for its international reach and, regardless of where you live in the world or even if you give up your citizenship, it’s well nigh impossible for Americans to escape federal taxes.
Forgive the reality check on this latest good news. Of course Skinted Minted Mum is swept away on the romance of it all: Aunt Pecunia has already dusted off her lemon two-piece in anticipation of a forthcoming invitation. However, beyond the rose-tinted spectacles there are some real financial benefits to getting hitched (or civilly partnered) in the UK which aren’t available to cohabitors.
For example, both Meghan and Harry could (theoretically) benefit from the rule that you can give stuff to your spouse without it being hit by inheritance tax. This could be useful for passing on the odd tiara or hunting lodge. If you haven’t got any cash, you can just pass on the IHT allowance in case your spouse gets rich after you kick the bucket.
Secondly, there’s the marriage tax allowance which lets one spouse transfer £1,100 of their personal tax allowance to the other, provided that the receiver earns less than £11,000 a year and the giver earns between that and £43,000 a year. It is doubtful, I must admit, whether either Meghan or Harry fit into this wage bracket.
Then there’s the ability to share your individual capital gains allowance with your spouse in case you get lucky on tech shares, perhaps. Your beloved can also inherit your Isa savings tax-free, negating the need to park assets in, ahem, shall we say Paradise?
Finally, depending on your pension scheme, both state and private, there may be provisions for a surviving spouse after you die which wouldn’t, unfairly, be available to a cohabiting partner.
Hopefully the happy couple will have some great accountants - they are going to need them. Meanwhile, Aunt Pecunia will be toasting the engagement with her favourite M&S fizzy, dabbing her eyes and wondering if the ring is properly insured.