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Mansion tax and equity release

Journalist: Callum Mason, i

ended 30. October 2025

With a proposed mansion tax on the table at the Budget for properties worth more than £2m, would mortgage advisors expect that some older homeowners with low income but expensive properties may end up having to use equity release to fund paying taxes if introduced?

Do you expect more enquiries and is this something you're getting enquiries about now?

2 responses from the Newspage community

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Editor
Eamonn Prendergast
Chartered Financial Adviser at Palantir Financial Planning Ltd
A mansion tax could push asset-rich, cash-poor pensioners to release equity just to pay the bill. I’m already hearing concern from older homeowners who live in valuable homes but have modest incomes. If a levy on properties over £2 million is introduced, some may feel forced to tap into equity release to cover the cost. While it can provide liquidity, it’s not without consequences rates are higher than standard mortgages and compound quickly over time.”
For some, using equity release might also reduce the size of their estate and preserve part of their residence nil-rate band, but that shouldn’t be the reason anyone feels pushed into borrowing against their home. Tax policy shouldn’t penalise people for simply staying in the house they’ve lived in for decades.”
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Editor
Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
Yes, this is certainly a possibility. In fact, the question should always be that if someone is in a position where they have a low income, but with significant value in their property, why would they not want to consider using this?

This doesn't necessarily mean equity release in the traditional sense, although that is something to consider.

It could also be downsizing or a retirement interest only mortgage for example.

There are also growing concerns from families about the likely inheritance tax bill they'll be leaving. Property is notoriously difficult to pass on efficiently, so some are releasing equity which they then gift to family. This means they're seeing the benefits that money has on their family while they are still here, but also reducing the potential inheritance tax bill later down the line.