Should Equity Release Be Higher Up Your Financial Planning Priority?

Yet again, recent HMRC figures confirmed record inheritance tax (IHT) receipts in December 2025 and tax year 2025/26 will set yet another all time for IHT receipts.  This trend will continue in 2026/27 and from 6^th April 2027, when unused pension funds become part of our estate and therefore also potentially subject to IHT, HMRC receipts will ‘mushroom’ up again.

In addition to IHT on pensions, do not forget:

• Capital gains tax allowance on property, shares and other investments has been reduced to just £3,000 and we expect capital gains tax rates to increase in the future.
• Investment income from Savings, Property and Dividends will all have income tax rates increased ‘across the board’ by 2% in 2026 and 2027.
• Agricultural Property Relief and Business Property Relief (currently 100% protection from IHT for each) was to be reduced to a new, combined Agricultural and Business Property Relief of £1m in total.  After outrage form many business owners and particularly farmers, this has now been increased to a combined £2.5m form April 20206, that said, this is still yet another tax on businesses and farmers on death for assets in excess of £2.5m.

Most people will not own farmland or have business interests so will not take advantage of the Agricultural and Business Property Relief.  Most of us have our wealth in our homes and our pension funds.

Therefore, should Equity Release from property be higher up the IHT and Estate planning agenda?

Equity Release is not ‘Bad’

• Equity release had a poor reputation in the 1980s, it was unregulated and people had their homes repossessed if negative equity took over.  The equity release market has developed massively over the last 30 years.
• Fully regulated by the Financial Conduct Authority.
• Equity release providers usually sign up to Equity Release Council to further protect consumers will agreements such as no negative equity guarantee.
• Financial advisers must have specialist equity release qualifications.
• As part of any advice process, your financial adviser must take you through ‘the good, the bad and the ugly’ of equity release and ensure suitability.
• In addition, your solicitor must also take your through the pros and cons to ensure your understanding of the actions you plan to take.
• Equity release products have developed over the years and are much more sophisticated and flexible, with many more providers, rate options, fees and redemption solutions.

Equity release has ‘grown up’.

A few years, we shot a video, highlighting the success of using equity release to then gift money to children, who then bought their own ‘tax free growth’ main homes.  This proved useful as now, those financial gifts are outside the estate for IHT (7 years) and the children both have main homes growing tax free in value.  In addition, the estate of the parents has been reduced for IHT as the equity value in their homes is lower.

ER for IHT Cut

Given the continued tax attacks on our wealth, Equity Release should be higher up all our financial priorities.  Whether you spend it, gift or put the money in trust, it should be considered.

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