Financial expert shares one thing NOT to do ahead of Reeves' Autumn Budget

A financial expert has warned Britons against doing one thing ahead of expected tax hikes in the Autumn Budget. Chancellor Rachel Reeves will attempt to balance the books next month to plug a roughly £20 billion shortfall, against a backdrop of weak economic growth and high borrowing costs.

In last year's budget, Ms Reeves raised taxes by £40 billion - the biggest increase in over 30 years. While it's something she has promised not to repeat, savers have understandably panicked at the prospect of cuts to the tax-free pension allowance. Eamonn Prendergast, chartered financial advisor at Palantir Financial Planning Ltd, has urged them against withdrawing their pensions before the fiscal statement on November 26, warning it would be "a very costly mistake". He said: "If you genuinely need the tax-free lump sum, take it. But withdrawing just because of Budget rumours risks locking money out of your pension for good."

Mr Prendergast added that Brits should avoid doing anything rash without first considering the HMRC rules around pension withdrawal and paying it back into saving accounts.

Under current legislation, people with defined pension schemes can take a 25% tax-free lump sum out of their pensions once they reach 55-years-old, rising to 57 by 2028. Savers can currently withdraw a maximum of £268,275, the equivalent to 25% of the old Lifetime Allowance.

The Government could consider scrapping the tax-free lump sum entirely, but it could also cap the maximum withdrawal amount at £200,000 or £100,000.

Mr Prendergast explained: "In the last Budget, some savers panicked, mistakenly thinking they could repay funds within 30 days, only to find [that] HMRC rules and platform restrictions made that impossible.

"Talk of cuts to the 25% allowance has been swirling for over a decade, and any real change would almost certainly include transitional protections.

"Knee-jerk withdrawals create more problems than they solve. It is better to plan calmly, take proper advice, and avoid the costly errors many non-advised clients made last time."

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, issued a similar caution to pension savers, urging them not to be "pushed into taking a decision you later come to regret".

She sid: "A pension is a hugely tax-efficient way to build wealth. Taking it out and putting it elsewhere risks leaving you open to a host of taxes, such as capital gains or dividend tax.

"You could also miss out on all important investment growth that would give you not only a bigger pension, but also a bigger slice of tax-free cash further down the line. If you leave the money in an easy access account, there's also the chance that you fritter it away over time."