People who cash in large pension pots could be unwittingly landing themselves with hefty tax bills, new research reveals.
Making withdrawals over and above your 25 per cent tax-free lump sum can push you into a higher tax bracket, and limit how much you can benefit from pension tax relief in future.
Analysis of official data about people who took an entire pension fund worth £100,000-plus shows they stumped up a collective £87.2million in tax between October 2024 and March 2025.
That amount was 20 per cent higher than the year before, and some people would have been hit with five-figure tax bills after accessing pensions in one go, according to the study by Standard Life.
It says large pension withdrawals can lead to unexpectedly high tax bills, and many retirees might have paid far more than they might have anticipated.
