Pension drawdown glossary
An HMRC rule that can treat tax-free cash as an unauthorised payment, with heavy tax charges, if it is used as a pre-planned step to increase pension contributions significantly. It only applies above set thresholds, such as tax-free cash of more than £7,500 in 12 months, and HMRC says lump sums taken as part of normal retirement planning are not caught.
Source: HMRC Pensions Tax Manual PTM133810: recycling of pension commencement lump sums · Last reviewed 24 September 2026
See every term in the A–Z glossary. Definitions are general information for the 2026/27 tax year, not personal advice.
Important: The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and benefits depend on individual circumstances. This is not financial advice.