HMRC to go after pension savers who returned their lump sum

Juno_Moneta

“HMRC to go after pension savers who returned their lump sum

Savers who returned their tax-free lump sum to their pension face a surprise bill of up to 70pc, following clarification from HMRC on the use of tax relief...”

Ouch! Well the forum did warn people not to make decisions based on pure speculation…

Anyone reading this and expect to be contacted now?


(Paywalled)

https://www.telegraph.co.uk/money/pensions/private-pensions/hmrc-to-go-after-pension-savers-who-returned-their-lump-sum/

michaels

My conspiracy theory side wonders if this is about discouraging people form pre-empting a cut in the PCLS planned for the budget....

Grumpy_chap

Juno_Moneta said:

HMRC to go after pension savers who returned their lump sum

That was always against the rules so it would seem only right and proper that the relevant authority applies and enforces the rules correctly.

The likely source behind the paywalled link above could be this one:
https://www.gov.uk/government/publications/pensions-schemes-newsletter-173-september-2025/newsletter-173-september-2025

molerat

The gist of it is there is no cancellation right after taking a pension lump sum.  HMRC made their position clear on 5 Dec 2024 and would be investigating cases after that date.

Non paywalled Daily Express version https://www.express.co.uk/finance/personalfinance/2115527/pension-update-hmrc-tax-lump-sum

DRS1

There is a related thread on the Savings and Investment Board
PCLS and Cancellation Rights — MoneySavingExpert Forum

HappyHarry

HMRC details here: https://www.gov.uk/government/publications/pensions-schemes-newsletter-173-september-2025/newsletter-173-september-2025

QrizB

Play silly games, win silly prizes?

JoeCrystal

Great to see the update from HMRC about this. Perhaps pension companies should include a warning in their paperwork to be more cautious about making snap decisions.

HedgehogRulez

Seems like a FAFO situation 

Pat38493

Interesting question is whether any financial advisers advised or encouraged their clients to do this at the time, or at least told them they could do it without risk.

But is this the same thing or consistent - when I read about this the other day, I thought the gist of it was that people had taken a tax free sum, and then somehow "cancelled" it using some kind of cooling off regulation, and returned the money to the pension without benefitting in any way.  HMRC was then stating that in their view the cooling off regulations that were trying to be used were not valid for pension lump sums.

If they just paid the lump sum back in and intended to get another 25% tax free that's different and clearly not allowed?

I am aware of cases where the lump sum was returned for example because there was an error in the amount e.g. the person wanted the reduced lump sum and the full amount was paid out.

Grumpy_chap

It does seem as though the tax is not being pursued against those that did the yo-yo before the last budget - quite possibly the announcement has made the news now as it is ahead of this coming budget.  

A spokesman for HMRC said: “We made our position on the tax rules around returning tax-free lump sums clear on Dec 5, 2024. We will seek to challenge alternative interpretations of these rules after this date.”