Turning over a new leaf: Is Equity Release right for you this autumn?

As autumn arrives and many of us reflect on our future-retirement security, legacy, and how best to support our families, homeowners aged 55+ may find equity release an option worth exploring. But with important proposed changes to inheritance tax and pension laws on the horizon, now is a particularly good time to understand all the implications before making decisions.

What is Equity Release?

Equity release lets homeowners unlock some of the capital tied up in their homes without having to move. The most common form is a lifetime mortgage, where you borrow against your property while still living there. Interest mounts over time, and the loan (plus interest) is repaid when you die or move into long-term care. Another less common option is a home reversion plan, in which you sell part (or all) of your home to a provider in exchange for funds, while retaining a right to live in it rent-free.

New inheritance tax & pension reforms: what you should know

Autumn 2025 is shaping up to bring changes that could affect how much of your estate passes to loved ones, especially if you have significant pension savings and/or property wealth.

Key proposals and confirmed changes include:

• Inclusion of unused pension funds in Inheritance Tax (IHT) from April 2027
  The government has confirmed that from 6 April 2027, most unused pension fund balances and death benefits will be included in the deceased person’s estate for IHT purposes. 
• Previously, many pension pots (especially defined contribution pensions) could be passed to beneficiaries without counting towards the IHT estate. That loophole is being closed. 

Wider IHT pressures & other relevant reforms

• The nil-rate band (the IHT threshold) remains frozen, meaning that over time more estates will exceed it as property values and asset values rise.
• There are also ongoing changes to reliefs (for example, business or agricultural property relief) that affect how much tax applies to such assets. 

How equity release may intersect with these changes

Given the above, here are some ways equity release (particularly lifetime mortgages) might fit into your autumn planning—and what to watch out for.

Potential advantages

1.    Reducing the size of your taxable estate
Since unused pensions will soon count towards estate values for IHT, you may have more of your wealth subject to inheritance tax than before. Using equity release to access some cash might allow you to make lifetime gifts (to children or grandchildren, for example), help settle debt, or even reallocate assets in a way that reduces what’s subject to tax on your death. 

2.    Gifting strategy with the seven-year rule
If you release equity and gift it to someone (a non-spouse beneficiary), those gifts may be exempt from IHT if you survive for seven years. So, equity release could supply the funds to make use of that rule. 

3.    Reducing reliance on pension wealth for income or support
If pension wealth is largely untouched, but will soon count towards IHT, you might prefer to draw more from property equity instead - or restructure things to reduce the portion of wealth that will attract IHT from April 2027 onwards. Equity release could help free up cash or reshape your financial profile.
 
Things to be cautious about

• Interest and loan accumulation: Lifetime mortgages build up interest, which can rapidly lessen what’s left for your beneficiaries. If reducing IHT is one aim, you need to model how a loan balance might grow over many years, especially if you won’t be making repayments.
• Effect on other benefits: Releasing equity might affect eligibility for means-tested benefits.
• Estate value vs. liquidity: Property is often less liquid than pension or savings assets. If your estate is heavy in illiquid assets (property, business assets), you may still face challenges in settling IHT liabilities.
• Timing: Gifts must be made sufficiently in advance (e.g. surviving the seven-year period) to catch exemptions; rushing into things without advice can risk unintended tax consequences.

Should you consider equity release this autumn?

Autumn can be a good time for reviewing your financial plans, making adjustments, and turning over new leaves. With the IHT / pension reforms scheduled for April 2027, acting sooner rather than later gives more flexibility:

• You have more time to plan and make gifts should you wish to use the seven-year exemption window.
• When things are less rushed, you can get advice (mortgage, financial, legal) and compare alternatives: downsizing, selling, using savings, or even changing pension drawdown strategies.
• You can assess whether equity release might help you live more comfortably while still preserving as much inheritance as possible.

Conclusion

This autumn could be a turning point for many homeowners considering how best to secure their retirement, enjoy life, and still leave something behind. With the planned changes to inheritance tax and pensions coming in 2027, equity release may no longer be just about boosting income—it could become a strategic tool in careful estate planning.

If you’re considering equity release, make sure you understand how these new rules may affect you, what you want to achieve (income, security, inheritance), and get tailored, expert advice. The “new leaf” you turn this season could help protect both your future peace of mind and your legacy.

Equity release and estate planning are complex areas, and the right approach depends on your personal circumstances.

Dentons Mortgages are qualified to advise on regulated mortgage and equity release products, and are not authorised or qualified to provide investment, pension, or broader financial planning advice.  

Any information contained in this article is for general information only and does not constitute personal financial advice. It is essential that you seek independent financial advice from a qualified adviser and professional legal or tax advice before making any decisions regarding equity release, gifting, or inheritance tax planning.