"Michael Summersgill, chief executive of AJ Bell, said months of rolling briefings and hints of a tax raid had prompted thousands of customers to make precautionary withdrawals in September and October, convinced the Treasury was preparing to cap the 25% tax-free pension commencement lump sum. Under current rules, savers aged 55 and over can withdraw up to £268,275 tax-free. Reeves ultimately chose not to touch the allowance, but Summersgill said the period of uncertainty had again shaken confidence."
"From April 2027, savers under 65 will only be allowed to put £12,000 per year into cash Isas, even though the overall £20,000 annual allowance remains unchanged. The government intends the remaining £8,000 to flow into stocks and shares Isas to boost investment in UK markets. But in a move that shocked many in the industry, HMRC will also impose a new tax charge on interest earned on uninvested cash held within stocks and shares Isas by under-65s."
Months of budget speculation prompted savers to withdraw about £600 million from pensions amid fears the 25% tax-free lump sum would be capped. Under current rules, savers aged 55 and over can withdraw up to £268,275 tax-free. Similar uncertainty previously triggered around £300 million of early withdrawals. The lump sum allowance remained unchanged, but the government advanced ISA reforms. From April 2027, under-65s will be limited to £12,000 per year in cash Isas, with the remaining £8,000 steered into stocks-and-shares Isas. HMRC will tax interest on uninvested cash within stocks-and-shares Isas and ban transfers into cash Isas.
Read at Business Matters
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