Inheritance Tax: A Family Affair

Inheritance Tax: A Family Affair

 by Guy Olson, The Equity Release Partnership

For many families across the Cotswolds, property isn’t just a home. It’s history, security, and perhaps the single biggest financial asset they’ll ever own. Yet as property values have quietly grown over the decades, so too has something less welcome… the reach of inheritance tax (IHT).

Once seen as a tax only for the very wealthy, IHT is increasingly catching ordinary families. According to the Office of National Statistics the average price of a detached home in the Cotswolds is £708,000.  And no sign of prices softening long-term, more and more people will find themselves with a potential IHT liability they never thought they may face.

For the older generation, this creates a peculiar tension. You’ve worked hard, paid your taxes, and hoped to leave a legacy.  Only to find that a significant slice of it might go to the Treasury instead of your children. Meanwhile, for those likely to inherit, there’s often a quiet discomfort in even raising the subject. After all, talking about money is hard enough; talking about inheritance can feel downright awkward.

But as uncomfortable as the conversation might be, it’s one worth having. Because the reality is that inheritance tax isn’t just a financial issue, it’s a generational one. It shapes how wealth moves – or doesn’t move – through families. And for many, it’s tied up in bricks and mortar.

Consider this: the family home that was bought for £60,000 in the 1980s might now be worth ten times that. It’s a wonderful success story, but also a double-edged sword. When the time comes, the tax bill could run into hundreds of thousands. (Don’t forget inheritance tax is payable on virtually everything you own, and there are rumours it may soon apply to the value of your pension too!)  But while some families have cash savings to cover it, many don’t.

That’s where the conversation around property wealth becomes crucial. For years, we’ve been taught to see our home purely as a place to live, not as a resource. Yet more people are beginning to recognise that their property is also a financial asset.  One that can be used to help children or grandchildren today, rather than waiting for the value to transfer later after tax when they’ve passed away.

Equity release is one of the tools that allows this to happen. It enables homeowners over 55 to access some of the value locked within their home while continuing to live there, either through a lump sum or flexible drawdowns. It isn’t right for everyone, and it’s not without important considerations, but in the right circumstances it can bridge generations.  Helping to fund gifts, supporting retirement income, helping to pay for care in the home or pay for school fees.

It’s a way of turning the family home from a static inheritance into a living legacy.

Ultimately, inheritance tax will continue to be part of the national conversation.  Particularly as property wealth keeps rising faster than allowances. The best approach for families, whatever their circumstances, is to start the discussion early. Not just about tax, but about values: how wealth should be used, shared, and enjoyed.

Because perhaps the greatest legacy any family can leave isn’t just the value of a house, but the wisdom to make that value work for them.

About the Author

Guy Olson – Managing Partner – The Equity Release Partnership

Guy is a later life financial specialist with a background in equity release and wealth planning. He works closely with solicitors, accountants, care providers and financial advisers to help clients make smart, practical decisions about their finances – whether that’s funding care, supporting family, or navigating the financial challenges of later life. Guy is a member of the Society of Later Life Advisers (SOLLA) and the Equity Release Council and brings a clear, down-to-earth approach to complex financial topics.

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