UFPLS calculator — uncrystallised funds pension lump sum

Each UFPLS is split at payment: 25% is the tax-free element and 75% is taxable — there is no separate tax-free lump sum to take first. The tax-free element cannot exceed the member's available lump sum allowance: where 25% of the payment is more than the allowance remaining, the tax-free element is capped at the remaining allowance and the amount above it is taxed as pension income instead. (That LSA cap is a different limit from the “permitted maximum” that caps a pension commencement lump sum at broadly 25% of the amount crystallised — a UFPLS has no crystallisation to test against.) The tool applies the LSA cap automatically from the allowance-already-used figure.

The taxable element is non-savings pension income. It stacks on top of the member’s other income for the year, so the tax attributable to the UFPLS is the difference between the liability with and without it — the marginal method. Where the taxable element carries adjusted net income past £100,000, the personal allowance is withdrawn at £1 for every £2 over, which can push the effective rate on the slice above the headline band rates. Scottish residents pay the Scottish non-savings rates on the taxable element; savings and dividend rates stay UK-wide. Providers usually deduct emergency month-1 tax from a first payment — that is a PAYE timing artefact, and the tool shows the correct annual liability.

The tax-free element of a UFPLS is a relevant lump sum for the lump sum allowance and consumes it £-for-£, exactly as a pension commencement lump sum of the same amount would. The standard LSA is £268,275 (FA 2024 Sch 9); the allowance remaining is the standard figure less the tax-free amounts already crystallised since 6 April 2024. Lifetime-allowance protections raise the ceiling — Fixed Protection 2012 £450,000, FP2014 £375,000, FP2016 £312,500, and Individual Protection 2014 and 2016 at 25% of the member's protected LTA — while pre-2024 crystallisations reduce it under the transitional rules. The tool models the standard allowance; protected and transitional cases route through the full LSA workflow.

Receiving a UFPLS is a trigger event for the Money Purchase Annual Allowance. From the trigger date, the member’s money-purchase pension input is tested against the MPAA — £10,000 for 2023/24 onwards — rather than the full annual allowance, and carry-forward can never be added to the MPAA itself. Defined-benefit accrual is unaffected: it continues to be tested against the alternative annual allowance, to which carry-forward can still apply. The trigger is permanent once fired; taking only a pension commencement lump sum with no drawdown income does not fire it, but a UFPLS always does.