In the following piece, Dave Harris, CEO of later life lender more2life, explores how rising Inheritance Tax (IHT) pressures are moving later life lending from a niche solution to a mainstream planning tool, and why lifetime mortgages are increasingly becoming part of strategic estate planning.
Inheritance Tax (IHT) has a way of sneaking up on families. While few expect to pay it, the numbers continue to rise year after year, with the latest figures showing Inheritance Tax receipts reached £6.6 billion in the first nine months of the 2025/26 tax year, £232 million higher than the same period last year. That puts the Treasury firmly on track for a fifth consecutive annual record.
These new records are the predictable result of frozen thresholds, rising property values and increasingly complex estates, and with unused pensions due to be brought into inheritance tax calculations from April 2027, the direction of travel is beyond question. The Office for Budget Responsibility (OBR) already expects IHT to raise £9.1 billion this year and more than £14 billion by the end of the decade.
For advisers, talking about IHT is going to become ever more common. It’s not just a niche issue affecting a tiny minority of clients, but just as it moves into the mainstream, so too must the structures available to advisers to mitigate against rising bills. And that, in my view, has to include later life lending products.
Moving up the agenda
It remains true that a very small proportion of estates currently pay inheritance tax. But fiscal drag has a habit of changing behaviour long before the headline numbers catch up, and clients are becoming more alert to the risk their estate could be caught, particularly where property wealth accounts for a large share of overall assets.
As a result, inheritance tax is moving higher up the advice agenda. Clients are asking tougher questions about legacy planning, gifting and how best to support the next generation without undermining their own financial security.
And that means advisers are having to become more familiar with products like lifetime mortgages which can play a powerful part in long-term financial planning.
Using property wealth more intelligently
Lifetime mortgages are rightly seen as an option for clients who want to unlock the equity in their home, perhaps to top up their pension savings or carry out home refurbishments. But they can also be incredibly effective as a means of controlling the value of an estate.
By borrowing against the home, clients can reduce the size of their estate, which in turn can help limit the eventual IHT bill, while retaining ownership of the property and the right to remain in it for life.
Crucially, the funds released don’t have to be used for day-to-day living. Many clients use them to make gifts to children or grandchildren, effectively bringing forward part of their inheritance to a point when it can make the biggest difference. Whether that’s helping onto the housing ladder, supporting education costs or providing capital for a business, it allows clients to see the benefits of that ‘inheritance’ while they are still alive.
For larger estates, there can be an added advantage. Reducing the estate value may help preserve the Residence Nil Rate Band, which begins to taper once the estate exceeds £2 million. In the right circumstances, the tax savings can be substantial.
With all of these cases, it’s crucial for clients to receive independent tax advice, which is why we have seen many financial advisers forming strong partnerships with tax specialists.
Improving perceptions
The growing role of later life lending reflects not just changing client needs, but how far the products themselves have evolved.
Modern lifetime mortgages are built around flexibility and control. Interest Reward options allow borrowers to reduce the long-term cost by making payments. A wide range of early repayment charge (ERC) structures, including products with no ERCs at all, means clients can adapt if circumstances change. Improved technology has also streamlined valuations and underwriting, delivering greater speed and certainty.
These features make lifetime mortgages far easier to integrate into advice, offering an adaptable option which can be tailored to individual goals and risk appetites.
Why advisers can’t afford to ignore this
None of this is to suggest lifetime mortgages are suitable for everyone. Good advice remains essential, and alternative options such as downsizing will still be right for some clients. But the bigger risk for advisers today is not overusing later life lending, but rather failing to consider it at all.
As inheritance tax affects more families, clients will expect advisers to understand how property wealth can be used more strategically. Advisers who avoid the conversation risk leaving value on the table and, ultimately, falling short of client expectations.
Later life lending has moved from niche to norm because the environment demands it. Advisers who recognise that shift, and who build it into their standard planning conversations, will be better placed to protect client outcomes, strengthen relationships and demonstrate real value.
