Equity Release and Taxation

Equity Release and Taxation

Looking to raise tax free cash without moving home?

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If you’ve already had equity release quotes from providers or advisers, arrange a consultation, give Key Advice the same criteria and they will beat or match their rate or pay you £500. This challenge only applies when you’ve had a consultation with Key, and to Equity Release Council approved plans available at the time of your recommendation from Key.

Equity Release and Taxation

For many people approaching retirement age, equity release could be a viable option to allow them to access funds that may be tied up in their property.

Equity release and taxation are inherently linked, so you should make yourself aware of the tax implications associated with releasing equity on your property before you click on the link below and get equity release quotes.

The two main issues associated with equity release and taxation:

  • If your total income including equity release exceeds your tax-free personal allowance, you will be expected to pay income tax on the difference.
  • It is also possible that if your total income is higher than a certain amount, you may lose your entitlement to certain ‘age allowances’, which could increase your overall tax bill.
However, in certain circumstances, equity release and its taxation could provide you with a few benefits, particularly with regards to inheritance tax (IHT).

Following your death, your estate will be subject to the government’s inheritance tax based on its overall value. It is understandable that many people will wish to avoid this inheritance tax, so as to pass on as much of their wealth to their relatives as possible. Equity release could be a solution to this issue.

As equity release tends to decrease the value of an estate, this could therefore help you to avoid inheritance tax. The government has a certain inheritance tax benchmark, meaning that estates worth less than this will not be subject to inheritance tax.

If you are considering equity release as an option to avoid your estate being subject to inheritance tax, you should also make yourself aware of the fact that the interest paid on an equity release arrangement could make it a more expensive option. It would therefore be a good idea to carefully consider your options prior to releasing equity.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Equity release may affect your entitlement to state benefits and will reduce the value of your estate. It may involve a lifetime mortgage or home reversion plan. All content set out in this website is provided for information only and should not be considered as advice. It is strongly recommended that you seek advice of a qualified, independent financial advisor before making any decisions to take out an equity release product.