HNWIs taking tax-free pension cash and changing investments due to upcoming Budget

High-net-worth-individuals (HNWIs) are taking tax-free pension cash and changing investment strategies to prepare for the upcoming Budget.

This is according to research from the Wealth Club, the UK’s largest non-advisory investment service for tax-efficient and private market investments.

It also found that 37% of its clients had either taken some of their pension wealth as a tax-free lump sum or were considering doing so, in response to speculation that this allowance could be curtailed after the Budget.

As it stands, pension savers can take up to 25% of their retirement pot as a lump sum, capped at £268,275.

However, rumours are circulating that this could be targeted by chancellor Rachel Reeves in her 26th November Budget.

Additionally, 56% said they were maximising tax-free income and growth from Isas ahead of the Budget.

Over a third (36%) were making use of the income tax relief and tax-free dividends of venture capital trusts (VCT), while 20% were making the most of pensions tax relief worth up to 45%.

A quarter (25%) are considering selling some of their most profitable investments to avoid potentially having to pay more capital gains tax following the Budget.

Wealth Club founder and chief executive Alex Davies said: “With rumours swirling around about what the government might do in the Budget, high-net-worth investors are moving fast to get their affairs in order.

“We’re seeing people withdraw the tax-free cash from their pensions and putting more into tax-efficient vehicles such as Isas and VCTs just in case any of the rules change.

“Using your Isa and VCT allowances ahead of time makes sense in the unlikely event of changes. But taking cash out of your pension is a much bigger and riskier decision.

“If you’re planning to retire within the next 12 months, taking your tax-free cash before the Budget might be a good idea. But for those with longer to go, the risks increase significantly.

“Taking money out early will likely mean a smaller pot to live on later. And if – as is quite possible – nothing changes, you’ll have taken funds out of a tax-efficient environment for no reason. And there’s no way to reverse that.

“This just shows how damaging the constant threat of government tinkering can be to people’s long-term wealth. We urge the chancellor to leave pensions alone. Otherwise, those who’ve worked hard and saved all their lives may well end up poorer – and those still saving will lose trust in the system.”

In order to obtain these results, Wealth Club surveyed 471 of its own members in October 2025. Of the 82% who disclosed their net worth on the survey, 91% had a net worth of more than £1m, 26% more than £5m and 6% more than £10m.