Equity release is becoming an increasingly popular option for homeowners looking to unlock the value tied up in their property. But one of the most common questions people ask is: Will I pay tax on the money I release?
The short answer? No. The money you unlock through equity release is tax-free. This is because the funds are treated as a loan rather than income. That means you won’t see a chunk of your hard-earned property wealth disappear into the taxman’s pocket—a definite win in anyone’s book.
Why Is It Tax-Free?
Equity release works by providing you with a loan secured against your property. Since loans are not classified as taxable income, the money you receive doesn’t come with an extra tax bill. This is one of the reasons equity release is an appealing choice for older homeowners who want to access funds without worrying about unnecessary deductions.
How Can You Use the Money?
The tax-free nature of equity release gives you the flexibility to use the funds in a variety of ways:
- Clearing an existing mortgage: Say goodbye to monthly repayments and free up more disposable income.
- Boosting your retirement income: Enjoy a more comfortable lifestyle or cover unexpected expenses.
- Helping family members: Provide a financial gift to loved ones, such as a deposit for their first home.
- Home improvements: Upgrade your living space or make necessary renovations.
Potential Tax Considerations
While the proceeds from equity release are tax-free, what you do with the money could have tax implications. For instance:
- Investing the funds: Any income or gains generated from investments may be subject to tax.
- Generating rental income: If you use the money to purchase a buy-to-let property, rental income could be taxable.
- Inheritance tax (IHT): Equity release reduces the value of your estate, which could potentially lower IHT liability. However, it’s worth considering the impact on what you leave behind for loved ones.
Why Seek Advice?
Although the tax-free aspect of equity release is a big selling point, it’s essential to understand the broader financial implications. Every situation is unique, and professional advice can help ensure you’re making the best decision for your personal and financial circumstances.
Disclaimer
This article is for informational purposes only and does not constitute tax advice. Equity release products are complex financial solutions, and you should consult a qualified advisor to fully understand the product features and any potential implications.
If you’re curious about how equity release could work for you, feel free to reach out—I’d be happy to help guide you through your options!
Ready to find out more? Visit our dedicated later life lending page to arrange your free 10 minute discovery call!

Mike Jones
Later Life Lending Specialist
Mike Jones is a dedicated later life lending specialist, leading the “Mewstone Later Life Lending” service with a focus on providing personalized financial solutions for those navigating the complexities of retirement and home ownership. With years of experience in retail banking and a deep understanding of later life lending, Mike is well-equipped to guide you through critical decisions such as equity release, retirement interest-only mortgages, and more.
Releasing money from your home is a significant choice, and Mike understands the importance of ensuring you are fully informed about your options. His approach is rooted in offering unbiased, expert advice tailored to your unique circumstances. Whether you’re looking to improve your retirement lifestyle or need help planning your financial future, Mike is committed to finding the right solution for you—without any preference for particular lenders or products. His ultimate goal is to help you make informed, confident decisions that suit your long-term needs and give you peace of mind.
At Mewstone, Mike believes it’s not about “selling” a product but about finding the right fit for each individual. You can trust that, when working with Mike, the focus is always on what’s best for you and your financial future.