Overview

• HMRC confirmed that once a pension lump sum is paid, the tax outcome and use of the lump sum allowance cannot be undone even if the money is returned.
• Pension withdrawals accelerated, with £10.4 billion taken tax-free in the six months to March and roughly £18.1 billion in 2024/25, a rise of about 36% year on year.
• Speculation ahead of Chancellor Rachel Reeves’s 26 November Autumn Budget has prompted some savers to take precautionary lump sums.
• Advisers cautioned that rushing could forfeit future tax‑free cash, with examples showing potential losses of up to about £25,000 for those who might otherwise benefit from further pot growth.
• Experts warned that money moved outside pensions can attract tax on interest, dividends and gains unless sheltered, and noted that taking only the tax‑free lump sum does not trigger the £10,000 money purchase annual allowance.