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7h ago

Pension Savers Pull Record £18.1bn in Tax-Free Cash as Budget Fears Grow

Policy uncertainty, including a 2027 inheritance tax change, is pushing savers to act early.

Nearly £10.5 billion was withdrawn between last October and this March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

  • New FCA figures obtained via FOI show £18.08–£18.1bn taken tax-free in 2024/25, with about 211,000 people withdrawing and £10.43bn taken in the six months to March 2025.
  • Wealth managers say worry about a potential cut to the tax‑free cap has fueled the rush, alongside the confirmed plan to bring most pension pots into inheritance tax from April 2027.
  • The Treasury has not ruled out changes ahead of the 26 November Budget, though one report cites a Whitehall source saying a cut is not currently being considered.
  • First withdrawals often face emergency PAYE, prompting about 60,000 refund claims in 2023/24 with average repayments around £3,300 and some exceeding £100,000; HMRC says overpayments are repaid and reclaim forms are available.
  • Advisers warn early withdrawals can forfeit tax‑sheltered growth and may increase inheritance tax exposure, urging savers not to make irreversible decisions based on speculation.