WHY A FAMILY WEDDING MIGHT BE THE PERFECT REASON TO SEEK FINANCIAL ADVICE

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).

And there is a good chance these weddings are going to be big. 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. The likelihood is that couples who wanted to keep things small and low key will have got married during the pandemic, so those still to tie the knot are going to want to party – they won’t be trimming their guest list any more than necessary and wedding suppliers are going to be in huge demand.

That bill is going to put a huge financial pressure on couples, not to mention the family members who are likely to be helping them.

You might not think that your child or grandchild’s wedding is a reason to seek financial advice, but if you are planning on giving the happy couple some money, it’s worth a quick chat with your adviser. That’s not so they can tell you whether or not it’s the right thing to do, but rather to make sure you do it in the right way.

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. Many clients also find that talking to their adviser helps take some of the emotion out of the decision making, too.

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. Within an ISA, your money will grow tax efficiently and you will not have to pay any tax when you cash it in, either.

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!

For more advice on the best way to help pay for a wedding, speak to your St. James's Place Partner.

The value of an investment with St. James's Place 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.

1 - https://www.hitched.co.uk/wedding-planning/news/rise-in-proposals-covid/

2 - Hitched, The National Wedding Survey 2019, based on a sample of 2,886 representative adults across the UK

‍