Funds received from Home Reversion Plans and Lifetime Mortgages are tax free as they are based on selling or borrowing against your main residence.
There is a way to arrange equity release on buy to let properties however this is only available as a Lifetime Mortgage and therefore not tax is payable on the funds.
The funds raised can be spent on what ever you wish within reason. Whilst the money raised belongs to you, it would be irresponsible of an adviser to allow someone to release funds from their home actively knowing that the client was vulnerable and could in fact end up making bad decisions. As an example, releasing equity from your home and spending it on gambling or speculative investments would not be advised.
I’ve seen people use equity release for all sorts of reasons which you’ll see in other blog posts and videos. The money is yours and is designed to be used in the best way you see fit!
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