Will the UK government stop us withdrawing our own cash?

You may have seen headlines like this circulating online. According to Betteridge's Law, any headline that ends in a question mark can be answered by the word "no". And this is no exception. No, the government aren't planning to stop pensioners withdrawing cash.

In particular, there have been stories circulating that we will soon have to tell HMRC if we intend to withdraw money from our accounts. And that we might even have to tell them what we are going to spend it on. According to Fullfact.org, that is total nonsense. The HMRC have better things to do than checking up on why you decided to draw a few hundred pounds out of your rainy day savings. They are far too busy chasing government ministers for unpaid stamp duty.

So where did these stories come from? As usual, the facts have been twisted to play into people's fears.

Cash is going out of fashion

I am (just about) old enough to remember when most people still got paid in cash. Every week, armoured vans would drive out delivering bags of cash to employers and post offices. Workers would get their wages in cash, and pensioners would queue at the post office to get their pensions in cash. Then they would all go and queue up at the offices of the gas board, electricity board, and council to pay their bills. Then the armoured vans would go round and collect all the money and take it back to the bank.

Once in a while, one of the armoured vans would get robbed (they were armoured for a reason). More frequently and more sadly, pensioners would sometimes get violently robbed. For those reasons alone, I am glad we no longer use cash to that extent.

But there are still people who prefer to use cash for their general day-to-day spending, for example, doing their weekly shop. It may be that they find it easier to keep track of their money that way, or they don't trust banks, don't want a credit card, or they don't want every transaction to be recorded. Or, they just prefer using cash. Their money, their choice.

Some shops are now going cashless, which means that you have to pay by card or phone in those shops. Their shop, their choice, and the government have said that they will not force shops or businesses to accept cash. Currently, there are still many options for buying things with cash. But that will no doubt change over time.

That is something of an aside, though. What about restrictions on getting your hands on your own cash, which is what this article is really about? What are the restrictions on that?

Maximum withdrawal from a cashpoint

There is a restriction on the amount of cash you can withdraw from a cashpoint machine per day. That is typically around £250 to £300, depending on the bank and the type of account.

There is nothing new here, cashpoints have always had maximum withdrawals since they were introduced almost 60 years ago. This is partly to reduce the possibility of fraud against customers and the bank, and partly to help avoid the machines running out of money.

Maximum cash withdrawal from a bank

There is no fixed maximum amount of money you can withdraw. I remember, many years ago, in a small local bank, the person in front of me withdrew £20,000 in cash. That was in the days when you could buy a small house for £20,000. He had a couple of very big blokes with him to keep him safe.

However, common sense should prevail. Firstly, do you really want to walk out of the bank with a huge amount of cash on you? Secondly, if you really want to withdraw a very large amount, it is worth notifying the bank in advance to make sure they have that much cash available. These days, it is not a given that a small branch will hold large amounts as a matter of course.

There is one thing that has changed. The bank might ask you what you are using the money for. You might well say that it is none of their business, and on one level, you would be quite correct. But there is a reason they do this, there has been an epidemic of fraud against (mainly) elderly people. Typically, this involves a "trademan" turning up at their door, persuading them that urgent work needs doing on their house, grossly overcharging for the work, and insisting on being paid in cash. Often, the victims will be unwell, perhaps with cognitive decline.

It is a balance between your desire to withdraw your own money without needing to give a reason, against protecting a vulnerable elderly person from being defrauded. Personally, I think there is a fair trade-off to be made there. If you really don't want to tell the bank what you need the money for, make up a plausible false reason, they won't usually check, and it isn't against the law. They are looking for people who have been conned into paying thousands to fix a roof tile.

One more thing, you might need an ID to make a large withdrawal. A bit of a pain, but it is understandable that you should need to properly identify yourself before walking out with a big bag of cash. This is another reason to notify your bank before making a withdrawal, so they can let you know what ID is required.

Summary

There is no government plot to stop pensioners accessing their own money. There are a few common-sense safeguards to help avoid fraud against the bank or its customers (ie you). But there is a gradual move away from cash, with a small but growing minority of retailers going cashless. Most people, at the very least, have a debit card to draw money out of a cash machine, so it might be worth making sure you know how to use that to pay in a shop.