Tax free Lump Sum Autumn budget 2025

[Origami]

If Rachel Reeves lowers (or even abolishes) he tax free lump sum in the forthcoming Autumn budget, are the changes likely to take place immediately or be effective from the next tax year, i.e. 5th April 2026?

Is there likely to be a transitional arrangement? It seems very unfair for someone born 1 day later to face the full tax penalty if they retire just after the new change is implemented.

Thank you

[PoorCarCollector]

How could anyone know?

It'd be pure guesswork / scaremongering now

We get posts like this everytime a budget is incoming.....

[alscar]

Origami said:

If Rachel Reeves lowers (or even abolishes) he tax free lump sum in the forthcoming Autumn budget, are the changes likely to take place immediately or be effective from the next tax year, i.e. 5th April 2026?

Is there likely to be a transitional arrangement? It seems very unfair for someone born 1 day later to face the full tax penalty if they retire just after the new change is implemented.

Thank you

I'm not sure anything Rachel has done or will do is going to be necessarily fair or at least any changes will always be unfair to someone !
As last year speculation is rife as to what may or may not happen with the TFC amount and despite media criticisms last year about people " wrongly " taking out the money just in case, exactly the same speculation continues this time.
Fwiw , if she does announce changes ( which I think is a 50/50 bet ) I think they would be made with immediate effect otherwise all she is going to do is start a stampede for those to take out money quickly and hence lose tax revenue.
But this is just a personal guess.
I did take out 100% of mine just before the election last year so I've been wrong so far.

[Zigster]

I agree - I don’t actually think it will happen, and if it does there will be some sort of protection available to avoid people getting caught by a sudden change. There is plenty of precedent for protection against these sorts of changes.

Having said that, I turn 55 just before the Autumn Statement and am making sure I’m ready to take the max lump-sum on my birthday. It’s a bit like Pascal’s Wager: taking it out and the limits not reducing has no negative consequences (as I can find an effective use for the money) but not taking it out and the limits reducing has significant negative consequences.

[ChocolateFrog]

Origami said:

If Rachel Reeves lowers (or even abolishes) he tax free lump sum in the forthcoming Autumn budget, are the changes likely to take place immediately or be effective from the next tax year, i.e. 5th April 2026?

Is there likely to be a transitional arrangement? It seems very unfair for someone born 1 day later to face the full tax penalty if they retire just after the new change is implemented.

Thank you

There's been atleast 4 threads that I can recall along the same lines. All speculating on stuff that hasn't happened.

I highly doubt it'll be abolished, just the usual scare mongering.

[Hustle_]

I remember when she was going to reduce ISA allowances by up to 80% according to some sources.

[Origami]

Wow, some spikes responses!

I'm just asking what the normal process is. IIRC changes in pension tax treatment require legislation and so they normally come into effect from the next tax year. I don't think that there were any transitional protections when changes were made in the lifetime allowance, but this is much more of a cliff edge effect.

As it happens I reach 60 just before the likely date of the budget in late October/ early November so I'm taking my lump sum as I always had intended to but it made me think.

Fiddling with pensions that people have invested in for decades does seem particularly unfair though.

[duckson]

I guess what’s changed compared to previous years is Torsten Bell now potentially has more of Reeves ear with regard the budget and various tax changes, the lump sum being one.

https://www.ft.com/content/4b344a5f-bdd1-4324-aca9...

Although it’s anyone’s guess what might happen!

[m_cozzy]

Im more concerned about this article i read this morning currently regarding limiting withdrawals.


https://ippfcommission.org/uk-pension-withdrawal-l...

[alscar]

That site doesn’t look or feel quite right to me !

[ferret50]

Rachell from accounts is more likely to choose a 'soft' target such as Premium Bond/Lottery winnings rather than fiddle about with pensions.

[SS2.]

m_cozzy said:

Im more concerned about this article i read this morning currently regarding limiting withdrawals.

https://ippfcommission.org/uk-pension-withdrawal-l...

Blimey, that's a very sketchy website.

[dingg]

SS2. said:

m_cozzy said:

Im more concerned about this article i read this morning currently regarding limiting withdrawals.

https://ippfcommission.org/uk-pension-withdrawal-l...

Blimey, that's a very sketchy website.

Indian website, it's not worth wasting any thought on.

[Origami]

November 26th, a month after my retirement date, thank goodness for that, for once the dice have fallen favourably!

[alscar]

Just be a bit wary of leaving it to the last minute - there have been posts about how long some have needed over the process.

[Origami]

Thanks, nearly 3 months should be plenty I'd hope.


I've put everything in already, but according to my HR head the date of retirement is fixed even if it takes the pension service longer to actually process the payments, and it is that date that needs to be before the budget cutoff.

[alscar]

Origami said:

Thanks, nearly 3 months should be plenty I'd hope.


I've put everything in already, but according to my HR head the date of retirement is fixed even if it takes the pension service longer to actually process the payments, and it is that date that needs to be before the budget cutoff.

Yes you would hope so.
In my case slightly different circumstances ( I had already retired as such ) and the money actually came through the day before the election.

[Hants PHer]

alscar said:

Just be a bit wary of leaving it to the last minute - there have been posts about how long some have needed over the process.

Agreed; for anyone who has a DC pension with Aviva it took 2 weeks from me doing an online request to the money landing in my bank account, which I thought was OK.