Your home · Your retirement · Your options
The £2 million property tax: could equity release help you stay in the home you love?
For some older homeowners, a property worth £2 million today is a home they bought decades ago for a fraction of that amount. They may have spent years paying off the mortgage, raising a family and improving it, while living on a much smaller income in retirement.
An increase in a home's value does not automatically put more money into its owner's bank account. That is why the planned “mansion tax” is causing concern among people whose wealth is largely tied up in their property.
At My Later Life, we understand why the prospect of another annual bill raises difficult questions about affordability, independence and staying close to the people and places that matter.
What does the Money Mail article say?
A Money Mail report describes homeowners worried about meeting the extra cost. It reports fears that some could feel pushed towards downsizing or equity release, particularly if the tax threshold were reduced to £1.5 million. That possible reduction is speculation in the article, rather than an announced change to the published £2 million threshold.
The personal stories show why property wealth and everyday affordability can be very different. The report features Anne Hubble, 84, who bought her home with her husband for £80,000 in 1981. She describes struggling with household costs and being worried about the upheaval of moving. It also features Mike and Jennifer Dunn, who bought a two-bedroom London flat for £740,000 in 2000 and expect its value to have risen substantially. Read their stories in the original article.
What is the planned property tax?
Under the government's published plans, the High Value Council Tax Surcharge will start in April 2028 and apply to residential properties in England valued at £2 million or more. It will be payable alongside existing Council Tax, with announced annual charges ranging from £2,500 to £7,500. See the government's published details.
Even the lowest charge represents approximately £208 a month to budget for. For someone managing retirement on a limited income, that could be a significant addition to heating, maintenance and other household bills.
A home bought for £80,000 decades ago could now be worth over £2 million. But its retired owner may still be cash-poor. How is that fair?”
Could equity release help with the cost?
Equity release may be one option to explore. A lifetime mortgage, generally available to eligible homeowners aged 55 and over, is a loan secured against the home that allows you to access some of its value while retaining ownership. Repayment normally falls due when the last borrower dies or moves permanently into long-term care. Depending on the plan, money can be taken as a lump sum or through smaller withdrawals. MoneyHelper explains lifetime mortgages.
The Mail report also features Patricia Kirk, whose household used equity release about ten years ago to repay a £200,000 interest-only loan. Her borrowing predates the new tax. Her experience illustrates why an existing equity release plan must also be considered when reviewing someone's finances. Read the Mail's account.
For a suitable borrower, released funds could help pay a future surcharge while they continue living in their home. However, borrowing would not remove the tax liability or reduce the property's valuation for the charge. A recurring annual bill also needs a longer-term funding plan, rather than a decision based only on the first year's payment.
Understand the costs and risks before deciding
The costs and consequences need careful consideration. If interest is added to a lifetime mortgage instead of being paid, interest builds on interest and the debt grows. This reduces the equity remaining in the home and can reduce the inheritance left to loved ones. Fees, early repayment charges, effects on means-tested benefits and future moving or care plans also matter. Read MoneyHelper's guide to equity release and its alternatives.
Check the alternatives before borrowing
Before borrowing, check the government's planned deferral scheme. The published proposals would allow eligible homeowners to delay paying the surcharge until ownership changes, with interest accruing and the debt secured against the property. Eligibility and final terms should be checked as the policy develops. Read the proposed support arrangements.
Other options may include using available savings, reviewing retirement income or downsizing if that fits your wishes. With the surcharge scheduled for 2028, there is time to understand the rules and compare the long-term costs before making a commitment.
Your questions about property tax and equity release
Has the tax threshold been reduced to £1.5 million?
The Mail article discusses that possibility. The published government plans referenced here use £2 million. Check official announcements before making decisions based on a potential change.
Was Patricia Kirk’s equity release taken out to pay this tax?
No. The article says her household used equity release about ten years ago to repay an interest-only loan. That borrowing predates the planned surcharge.
Do I have to take out equity release?
No. It is one possible option to discuss. Consider any available tax deferral, savings and other approaches alongside the long-term costs of borrowing.
Talk to My Later Life about your options
At My Later Life, we can help you explore whether equity release suits your circumstances, explain how the borrowing could grow over time and discuss alternatives. Your income, family priorities and future needs should be at the centre of that conversation.
Further reading: Read the original Money Mail article.
Information checked on 16 September 2026. Tax proposals and product terms may change. This article provides general information, not a personal recommendation. A lifetime mortgage is secured against your home. Ask for a personalised illustration explaining its features, costs and risks.
