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6d ago

Pension Savers Pull Record £18.1 Billion in Tax-Free Cash in 2024/25

Anxiety over potential rule changes before the 26 November Budget has prompted many to take tax-free cash early.

Nearly £10.5 billion was withdrawn between last October and this March
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Overview

  • FOI data show 211,000 people took their pension commencement lump sum in 2024/25, with £10.43 billion withdrawn in the six months to March and 111,869 takers in that period.
  • Advisers link the rush to policy uncertainty, including the confirmed move to count most unspent pensions in inheritance tax from April 2027 and speculation about tighter limits on tax‑free cash.
  • Under current rules most savers can take 25% of their pot tax‑free up to £268,275, either in one go or in stages.
  • First-time flexible withdrawals are frequently put on emergency PAYE codes, causing temporary overpayments, and HMRC says it issues refunds, with £44 million reclaimed in the first quarter of 2025.
  • Financial planners warn against hasty decisions and note some use a small initial withdrawal to prompt correct tax coding, while the Treasury declines to comment on possible changes ahead of the Budget.