HMRC published its most recent pension schemes newsletter on September 25, 2025. The publication addresses the tax treatment of tax-free lump sums paid back into registered pension schemes where they are not covered by FCA cancellation rights. It also supplements the FCA’s statement along similar lines regarding the application of its cancellation rules on returns of tax-free lump sums.  

During speculation in the run-up to the next Budget in November 2025, the newsletter reinforces HMRC’s previous comments concerning the tax consequences where members take pension commencement lump sum (PCLS) or uncrystallised funds pension lump sum (UFPLS) and subsequently seek to return these payments to the scheme if the expected changes do not materialise. 

HMRC confirms that, where cancellation rights arise under FCA rules, there will be no tax consequences for a consumer exercising these rights. However, since FCA rules do not confer cancellation rights in relation to contracts allowing members to take a PCLS or UFPLS, the tax consequences of payments of these forms of lump sum cannot normally be reversed. In addition, a member's lump sum allowance and lump sum and death benefit allowance will not be restored, including in situations where registered pension schemes offer cancellation beyond FCA rules. 

The newsletter also states that amending regulations will be made early in 2026 making minor technical changes to the legislation in the Finance Act 2024 abolishing the lifetime allowance. 



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