Clients who want to act before the Budget

The Budget is on 28 October 2026. The Chancellor’s letter to the Treasury Select Committee confirming the date was published on GOV.UK on 31 July 2026. Nothing has been announced. In the weeks before a Budget, a client who has read something rings the accountant and asks whether to act now.

9 min read · Altro Partners, by Equity & General

£10 billion

of additional pension tax-free cash withdrawn by savers ahead of the 2024 Budget, on Financial Conduct Authority data. No rule on tax-free cash changed in that Budget.

AJ Bell, as reported by Money Marketing, 2 September 2026

Reacting to

Budget speculation risks pushing clients into costly mistakes, AJ Bell warns (Money Marketing, 2 September 2026)

AJ Bell warned on 2 September 2026, reported by Money Marketing, that advisers face a surge in people wanting to make damaging decisions ahead of the Budget: withdrawing pension tax-free cash early, crystallising capital gains, or making gifts they cannot afford. The warning is aimed at financial advisers. The FCA’s Financial Lives 2024 survey found that 8.6% of UK adults had taken regulated financial advice in the previous twelve months, and 13% of the self-employed. A business owner with no financial planner asks their accountant instead.

What happened before the 2024 Budget

Sarah Coles, head of personal finance at AJ Bell, pointed to the 2024 Budget, when speculation about restrictions to pension tax-free cash contributed to savers withdrawing an additional £10 billion, according to Financial Conduct Authority data cited in the Money Marketing report. The rules on tax-free cash did not change.

Coles said: “As the weeks wear on, we can expect more of this, and there’s an increasing danger that people feel they need to take steps ‘just in case’ that they could sorely regret later.”

The Pensions Commission, whose interim report was published in May 2026, estimated that 14.6 million people are not saving enough for retirement. AJ Bell says that figure rises by a further two million if people withdraw and spend their tax-free cash. Coles also cited 2024 Department for Work and Pensions research showing that a one-off purchase was the most frequent use of tax-free cash among people taking only part of their entitlement.

Four decisions that cannot be reversed

The four decisions AJ Bell lists cannot be reversed.

Tax-free cash

Once a pension commencement lump sum is paid it is out of the pension, and the amount counts against the lump sum allowance of £268,275 (GOV.UK, individual lump sum allowances). Rebuilding it means fresh contributions inside the annual allowance of £60,000 for 2026 to 2027 (GOV.UK, pension schemes rates, updated 6 April 2026). If the Budget leaves tax-free cash alone, the client who waited has lost nothing, and the client who acted has moved money out of a tax-sheltered wrapper for good.

Capital gains

Capital Gains Tax is 18% within the basic rate band and 24% above it from 6 April 2026, with an annual exempt amount of £3,000 for 2026 to 2027 (GOV.UK, Capital Gains Tax rates). Selling now to avoid a possible rise means paying 24% today. At £3,000 and 24%, the annual exemption is worth £720 a year, so realising gains gradually saves far less than it did.

Gifts

No inheritance tax is due on a gift if the giver survives seven years. Taper relief runs from 32% on gifts made three to four years before death down to 8% at six to seven years, and £3,000 of gifts each tax year sit outside the estate under the annual exemption (GOV.UK, Inheritance Tax: gifts). None of that addresses the risk AJ Bell identifies, which is affordability.

Stopping

Coles warned against pausing regular contributions or investments while waiting: “The key to regular investments is the regularity, so think long and hard before pausing your plans based on a fear of something that may never happen.”

AJ Bell, 2 September 2026: speculation about restrictions to pension tax-free cash contributed to savers withdrawing an additional £10 billion before the 2024 Budget, on Financial Conduct Authority data.

A worked example

This example uses a made-up client and made-up figures.

An owner-manager aged 57 has a £400,000 defined contribution pot, still runs the business, and has no immediate need for cash. He reads that tax-free cash might be capped, and asks his accountant whether to take his £100,000 now.

This example assumes he takes it and the Budget changes nothing. The £100,000 moves from a wrapper where investment returns are sheltered to one where they are taxed. In a deposit account or general investment account returning 4%, it produces £4,000 of interest a year. His income makes him a higher rate taxpayer, so his Personal Savings Allowance is £500, and £3,500 of that interest is taxed at 40%, which is £1,400 a year.

Taking the £100,000 now, if the Budget changes nothing

Made-up figures

Interest a year at 4%, in a deposit account or general investment account£4,000

Personal Savings Allowance for a higher rate taxpayer£500

Interest taxed at 40%£3,500

Tax a year, every year, on money that produced no tax charge the month before£1,400

He has used £100,000 of his £268,275 lump sum allowance, and put £100,000 into his estate today. One point runs his way: taking the tax-free lump sum on its own does not trigger the money purchase annual allowance, which comes from taking taxable income flexibly, so his £60,000 annual allowance survives. Had he drawn taxable income alongside it, the money purchase annual allowance of £10,000 (GOV.UK, pension schemes rates) would have cut his ability to put business profits into a pension by £50,000 a year.

If he waits and tax-free cash is restricted on 28 October, he is worse off than if he had acted. The comparison the client needs is between a certain, permanent, immediate cost and a possible one. Setting it out on paper is accountancy work.

Who does what

Accountancy work

The accountant owns the factual half of the question: what the current rules are, on what date, from which published source; what the decision costs in tax if taken; what it costs if taken and the rumour proves wrong; and what it costs to wait. None of that requires FCA authorisation.

Regulated advice

The other half is the question the client asked: should I do it. Telling a client to take the lump sum, sell the holding or make the gift is a personal recommendation on a regulated activity, and sits with the Equity & General financial planner. The figures on who takes advice are on the advice gap.

Two things to do this week

Write the holding answer down before the calls come. Three or four sentences, used by everyone in the practice: the Budget is on 28 October, nothing has been announced, here is the rule today with its source, here is what acting early costs in tax whether or not the rumour is right, and the decision about whether to act needs someone authorised to look at your whole position.
Run one list. Pull the clients aged 55 and over with a defined contribution pension, and the clients holding large unrealised gains outside an ISA. Those two groups contain the people who might act before 28 October. Have the list before the calls start. What shows in the accounts on the gains side is covered in when a capital gain reaches the accountant.

What is not yet settled

The contents. The date is fixed at 28 October 2026 and the Office for Budget Responsibility publishes its updated economic and fiscal outlook the same day. No measure on pensions, Capital Gains Tax or Inheritance Tax has been announced. AJ Bell has called on the government to introduce a tax lock guaranteeing the future of pension tax relief and tax-free cash; that is a lobbying position.

Two things stay open after the date. When a measure takes effect matters as much as whether it happens: immediate-effect measures punish waiting, and measures dated from April do not. And for deaths on or after 6 April 2027, most unused pension funds count in the estate for inheritance tax (Finance Act 2026), which affects any decision to take money out of a pension early. That change is set out in when the pension joins the estate, and the tax position of retired clients in a million pensioners paying higher rate tax.

Common questions

Why does a pre-Budget question come to the accountant before a financial planner?

Because the accountant is the professional the owner-manager already has. The FCA’s Financial Lives 2024 survey found that 8.6% of UK adults had taken regulated financial advice in the previous twelve months, and 13% of the self-employed. The client speaks to the accountant about money and treats a Budget rumour as a tax question. The call arrives in a practice that is qualified to explain the tax consequence of a decision and not authorised to recommend the decision itself.

Is taking tax-free cash from a pension reversible if the Budget changes nothing?

No. Once a pension commencement lump sum is paid, the money is out of the pension and the amount is set against the lump sum allowance of £268,275 (GOV.UK, individual lump sum allowances). There is no mechanism to put it back beyond fresh contributions inside the annual allowance of £60,000 for 2026 to 2027 (GOV.UK, pension schemes rates, updated 6 April 2026). A client who withdraws £100,000 in October and finds in November that nothing changed cannot restore the position.

Does crystallising capital gains early save tax if rates rise?

Only if rates rise, and the cost is paid at once. Capital Gains Tax is 18% within the basic rate band and 24% above it from 6 April 2026, with an annual exempt amount of £3,000 for 2026 to 2027 (GOV.UK, Capital Gains Tax rates). Selling now to beat a possible rise means paying 24% today on gains that might otherwise have been deferred for years. The annual exempt amount at £3,000 is worth £720 a year at 24%, so realising gains gradually saves far less than it did. Neither point tells a client what to do; both belong in front of them before they decide.

What is the risk in a client making large gifts ahead of the Budget?

Affordability. No inheritance tax is due on a gift if the giver survives seven years, taper relief runs from 32% for gifts made three to four years before death down to 8% at six to seven years, and £3,000 of gifts each tax year sit outside the estate under the annual exemption (GOV.UK, Inheritance Tax: gifts). Those rules do not let a client take a gift back. AJ Bell’s warning, reported by Money Marketing on 2 September 2026, is that people give away more than they can afford because they fear a future rule change and then find themselves short later in retirement.

How do the accountant and the financial planner handle a pre-Budget question together?

In two halves. The accountant answers the factual half: what the current rules are, what the decision costs in tax if it is taken, and what it costs if it is taken and the rumour proves wrong, using dated published sources. The regulated half, whether the client should take the lump sum, sell the holding or make the gift, goes to the Equity & General financial planner, who can see the client’s wider position. The accountant carries on with the accounts and tax work. The client has both halves before 28 October.

Financial planning for your clients, alongside the accounts and tax work

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