Budget announced for November 26, 2025

The 2025 Budget date has been announced: Wednesday, November 26. As pensions seem to be considered low-hanging fruit for the Treasury, there are some changes that could be on the cards.

As usual, speculation begins in the weeks leading up to Budget Day. We already know that inheritance tax will apply to unused pension savings (and some death benefits) where the member dies on or after April 6, 2027. Here are some potential pension savings targets for the Chancellor as she seeks to balance the nation’s books:

• Reducing or removing altogether the current 25 per cent tax-free lump sum on pension withdrawals, which is currently capped at £268,275.
• Removal of higher-rate tax relief on pension contributions, or even a flat rate of relief. 
• Removal of the state pension triple lock.
• Changes to the salary sacrifice system, either by capping the amount individuals can sacrifice or by removing either or both of the national insurance and tax exemptions on salary sacrifice payments.

However, it is important to remember that this is just speculation. Snap decisions should not be made based on rumours, as this can prove costly. Last year, some individuals panicked and cashed in pension lump sums on the back of media reports that the tax-free allowance was about to be abolished. When the change did not materialise, subsequent post-Budget pleas to HMRC to allow the withdrawn sums to be reinstated to the pension fund fell on deaf ears and upset many well-laid retirement plans.