Older homeowners turn to equity release to ease IHT worries

Equity release as an estate planning tool

The latest Canada Life research suggests more people are turning to equity release as an estate planning tool, in response to changes in inheritance tax (IHT) rules. 

Canada Life say that 22% of their equity release applicants plan to give some of the money they release to loved ones. That’s an increase from 13%, according to the insurer and equity release provider.

Sadna Zaman of Canada Life said: “We’re seeing more people turn to equity release not just for one-off expenses or big-ticket projects like home improvements or paying off an existing mortgage, but increasingly as an estate planning tool. 

“With the Government recently confirming its intention to bring unused pension funds into the scope of inheritance tax from April 2027, we anticipate that even more individuals will be turning to equity release as a way to support family members through gifting, while also potentially reducing their future inheritance tax liabilities.”

Is equity release a sensible estate planning tool?

We don’t provide advice on our website, and refer you to our selected equity release advisers for personalised advice and information. They may also suggest you talk to a specialist tax adviser for further advice on IHT matters.

The potential driver for using equity release that Sadna Zaman refers to is the fact that more estates may be liable for inheritance tax in the coming years. That’s because, from April 2027, most unused pension funds will be included in an estate for IHT liability, as well as the home and other assets. That will mean many more people will be tipped over the IHT threshold. 

Equity release is one possible estate planning tool because releasing equity from your home now will reduce the value of your estate when you die. That has the potential to reduce the inheritance tax due on it, and possibly take your estate below the IHT threshold altogether.

All of this needs to be balanced against the underlying pros and cons of equity release. Also, inheritance tax can be a complex issue, so the wider context of your affairs and alternative estate planning tools should all be considered. There’s no doubt that you likely need professional advice before deciding what’s right for you and your family.

Other reasons people release equity

Here at Equity Release Wise, we frequently analyse data from providers on why their customers turn to equity release. Data over the past year or so from other providers and advice firms also suggests that releasing equity to gift to loved ones is increasing.

For example, a leading advice firm said that 1-in-8 customers gifted some of the money they released in the last quarter of 2025, compared to 1-in-10 the year before.

Looking at other reasons for releasing equity, this research from Canada Life looked like this: 

• Making home improvements – 43% using some of the money for this.
• Clearing an existing mortgage – 27% per cent of respondents mentioned this. 
• Covering day-to-day living costs – a tie in second place also at 27%.
• Holidays – a motivation for 25% of Canada Life’s equity release customers.

Is equity release right for you?

If you are thinking about equity release for any reason, it’s vital that you carefully weigh up the pros and cons of equity release. Just as importantly, speaking to an adviser can help you understand your options and compare plans across Canada Life and other leading equity release providers.

To find out if you are eligible, how much you can release, and get all the advice and support you need, talk to one of our selected advisers by calling 0808 178 3055 or request a call back.