Not only is there huge pent-up demand after COVID-19 restrictions forced thousands of couples to cancel their big day, but surviving lockdown together also seems to have spurred many into making a lifelong commitment. In November wedding-planning website Hitched reported that some jewellery brands saw sales of engagement rings rise by 40% last year.1
In 2019, Hitched revealed that the average UK wedding cost couples and their families a staggering £31,974.2 That figure may well rise over the next few years.
If you’re helping your child or grandchild with their wedding, then it’s an important time to seek financial advice. For example, you might know that you are able to give some of your money away each year to help you reduce a potential Inheritance Tax bill, but did you know that there are specific allowances for wedding gifts?
Each year, you can give £5,000 to a child getting married, £2,500 to a grandchild or great-grandchild, or £1,000 to anyone else and reduce the taxable value of your estate. Of course, this won’t cover the cost of the wedding, but it could reduce your tax bill further down the line and your adviser can help ensure everything is set up and recorded properly.
Equally as important, your adviser can also make sure you take money out of the right pot. If you’re over 55 and are still working, you might be tempted to dip into your pension, but there’s a risk you could end up with a huge tax bill or inadvertently trigger the money purchase annual allowance (MPAA) – a pernicious piece of legislation that drastically reduces the amount of money you can pay into a pension once you’ve accessed it.
Your adviser can help you look at the bigger picture and ensure you make the gift in the most tax-effective way, without jeopardising your own financial future in the process.
If you’re planning for further down the line and want to pay for all or part of a child’s wedding, you can also talk to your adviser about putting money away on a regular basis. A Stocks & Shares ISA – as long as you have some allowance you’re not using – can be a good place to start growing a pot for your child. For younger children, you can of course use a Junior ISA – but you just need to bear in mind that once they are 18, they can spend the money as they wish, and at that age they may not quite have the same spending priorities as you!
The value of an investment with St. James’s Place Wealth Management will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested. The levels and bases of taxation, and reliefs from taxation, can change at any time and are dependent on individual circumstances.
2 Hitched, The National Wedding Survey 2019, based on a sample of 2,886 representative adults across the UK