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Pension withdrawal tax calculator

Estimate tax and take-home income from a pension withdrawal.

Free, no sign-up. AI never does the maths.

Tax on this withdrawal · 2026/27£6,000.00

See the working
Worked example. Net received £34,000.00
— Inputs · 7

One payment, split and stacked.

Withdrawal type

The payment before any tax. The tool splits it 25% tax-free / 75% taxable, capping the tax-free part at the lower remaining allowance.

Salary, State Pension, other pensions in payment, rental profit — gross, for the same tax year. Savings interest and dividends are not modelled by this quick tool.

The LSA total used before this payment, including any pre-April-2024 transitional deduction. Leave at £0 if none.

Use the separate LSDBA figure from the provider. It can differ from the LSA figure.

The bands and the personal allowance come from the year’s versioned config.

Scottish rates apply to non-savings income; the 25% split and the personal allowance are UK-wide.

A UFPLS’s tax-free element is capped at the lower of the remaining lump sum allowance and the remaining lump sum and death benefit allowance — the permitted maximum (PTM063300). The tool uses the standard allowances, and other protected cases need the full workflow. The exception is where the payment may not be a UFPLS at all. It is not one if the member has Enhanced Protection with lump sum protection, and it may not be one with Primary Protection or a lifetime allowance enhancement factor. In those cases confirm with the scheme administrator whether it qualifies and how it is taxed. The UFPLS calculator shows the remaining allowances after the payment.

For planning and illustration purposes only. Verify all inputs against source documents. This tool does not constitute financial or tax advice.

Print this quick illustration now. Signed-in users can add a client or file reference before saving it as a PDF. This quick illustration is not available as a saved compliance annex.

How a flexible pension withdrawal is really taxed: the usual 25% tax-free / 75% taxable split, the taxable element stacked on your other income, and the effective marginal rate — with the £100k personal-allowance trap flagged when the slice crosses it.

Free to use, with no sign-up. Your figures stay in this browser unless you choose to share them or send them to your workspace. Calculation methods and checks.

— Understanding the result

Up to 25% of a pension withdrawal is normally tax-free — the tax-free element of a UFPLS, or the PCLS taken at designation — within the lump sum allowance (PTM063300). The rest is pension income taxed at your marginal rate (ITEPA 2003 s.579A), stacked on top of everything else you earn in the same tax year. There is no flat rate: the tax depends on your total income for the year.

— How it's calculated

The 25% tax-free / 75% taxable split

An uncrystallised funds pension lump sum (UFPLS) is normally 25% tax-free and 75% taxable, payment by payment. From 6 April 2024 the tax-free quarter is capped at the permitted maximum — the lower of the remaining lump sum allowance and the remaining lump sum and death benefit allowance — and anything above it is taxed as pension income. Flexi-access drawdown works the other way round: the tax-free cash is taken once, as a PCLS at designation, so every later income payment is taxable in full. Both routes produce the same overall split — the difference is when the tax-free element arrives.

PTM063300 · FA 2004 Sch 29 para 4A · ITEPA 2003 s.579A

Stacked as non-savings income, taxed by the marginal method

The taxable element is pension income under ITEPA 2003 Part 9 — non-savings income, sitting at the bottom of the income-tax computation, below savings and dividends in the statutory ordering. The tax a withdrawal actually costs is therefore the marginal difference: the year’s tax with the taxable element included, minus the year’s tax without it. A slice can start in one band and finish in another, which is why the effective rate on the withdrawal rarely equals a single headline rate.

ITEPA 2003 s.579A · ITA 2007 s.16

The £100,000 personal-allowance taper

The taxable element counts in adjusted net income. Above £100,000 the personal allowance is withdrawn at £1 for every £2 of income over the threshold, reaching zero at £125,140 — so a withdrawal that lifts income across that zone loses allowance as well as paying tax, an effective marginal rate of about 60% in the rest of the UK (higher in Scotland) on the affected slice. The tool reports the allowance stripped separately, and the cost is already inside the tax figure it shows.

ITA 2007 s.35

— How to work out the tax on a pension withdrawal

  1. Step 1

    Choose the withdrawal type

    A UFPLS is normally 25% tax-free and 75% taxable, payment by payment. Drawdown income taken after the PCLS is taxable in full.

  2. Step 2

    Split the payment

    For a UFPLS, take 25% of the gross payment as the tax-free element (from 2024/25 capped at the lower of the remaining lump sum allowance and the remaining lump sum and death benefit allowance) and the rest as the taxable element. For drawdown income the whole payment is the taxable element.

  3. Step 3

    Stack the taxable element on your other income

    The taxable element is non-savings pension income, added on top of salary, State Pension and other income for the year and taxed through the bands from there.

  4. Step 4

    Read the attributable tax and the effective rate

    The tax the withdrawal costs is the year’s tax with the taxable element minus the year’s tax without it. If the slice pushes adjusted net income past £100,000, the personal-allowance taper raises the effective rate on that slice.

— Worked example

rUK · 2026/27 · £40,000 UFPLS · £20,000 other taxable income
Tax-free element (25%)
£10,000
Taxable element (75%)
£30,000
Tax on the other income alone
£1,486
Tax on other income plus the taxable element
£7,486
Tax attributable to the withdrawal
£6,000
Net in the member’s pocket
£34,000
Effective marginal rate on the taxable element
20%

Figures computed live by the same engine the tool above runs. Here the taxable element sits wholly inside the basic-rate band on top of the other income, so the effective rate equals the basic rate — larger slices straddle bands and can cross the £100,000 personal-allowance taper.

— Frequently asked questions

How much tax will I pay on my pension lump sum?

For a UFPLS, 25% is tax-free up to the permitted maximum (the lower of the remaining lump sum allowance and the remaining lump sum and death benefit allowance) and the rest is taxed as income at your marginal rate on top of your other income for the year (PTM063300). There is no flat rate: the taxable element can straddle bands, and a large payment can push adjusted net income past £100,000, where the personal-allowance taper raises the effective rate on the affected slice to about 60% in the rest of the UK.

Do I pay tax on my pension?

Pension income — drawdown payments, annuity income, scheme pensions and the State Pension — is taxable as non-savings income (ITEPA 2003 s.579A). Only the tax-free element escapes: the PCLS taken at crystallisation, or the 25% of each UFPLS, tested against the lump sum allowance and the lump sum and death benefit allowance. If your total income for the year sits within the personal allowance, no tax is due.

Why was my first withdrawal taxed so heavily?

The first flexible payment from a pension is usually taxed under an emergency month-1 code, which sets only one-twelfth of the allowance and bands against the whole payment — so the provider deducts more than the year actually owes. The over-deduction is reclaimable in-year on form P55, P53Z or P50Z, or comes back through HMRC’s end-of-year reconciliation. The correct annual figure is what this calculator shows.

Does a pension withdrawal affect my personal allowance?

It can. The taxable element counts in adjusted net income, and above £100,000 the personal allowance falls by £1 for every £2 over, reaching zero at £125,140 (ITA 2007 s.35). A withdrawal that lifts income across that zone therefore carries an effective marginal rate of about 60% in the rest of the UK on the affected slice. The tax-free element does not count towards adjusted net income.

— Related