Pension tax-free lump sum calculator

Work out your tax-free cash and the tax on the taxable portion, whether you take 25% up front and leave the rest invested, take a UFPLS withdrawal, or withdraw the whole pot in one go.

Figures for the 2026/27 tax year. Last reviewed 01-09-2026.

The three ways to take money out

Take 25% up front, then drawdown: you crystallise some or all of your pot, take 25% of the crystallised amount as tax-free cash, and the remaining 75% moves into drawdown. Nothing else is taxed this year — the 75% only becomes taxable when you actually draw it out later, which this calculator doesn't try to predict.

UFPLS (Uncrystallised Funds Pension Lump Sum): each withdrawal you take is automatically split 25% tax-free and 75% taxable, on that withdrawal alone. Take £20,000 this way and £5,000 arrives tax-free while £15,000 is added to your taxable income for the year, whether or not you take another UFPLS withdrawal later.

Full withdrawal: you take the entire pot in one go. The mechanics are the same as UFPLS — 25% tax-free, 75% taxable — but because it's the whole pot at once, the taxable 75% is usually a much bigger number landing in a single tax year, which is where the tax bill often surprises people.

A worked example

Say you have a £300,000 pot and £20,000 of other income already coming in this tax year, and you take the whole thing as a full withdrawal (or the equivalent single UFPLS payment). Tax-free cash is 25% of £300,000 = £75,000, comfortably under the £268,275 Lump Sum Allowance. That leaves £225,000 taxable, stacked on top of your existing £20,000.

Tax on £245,000 total income minus tax on £20,000 alone gives the tax due on that £225,000 specifically — it works out at roughly £95,000, because most of it falls into the 40% and 45% bands once it's stacked on top of what you already earn. Net, you'd actually receive around £205,000 in total: the £75,000 tax-free cash plus what's left of the £225,000 after tax.

Compare that with taking 25% up front instead: the same £75,000 tax-free cash lands now, tax-free, and the remaining £225,000 stays invested rather than being taxed all at once. No tax is due this year at all under that route — you've simply deferred the decision on the rest, rather than avoided tax on it altogether.

Why the tax-free cash amount is capped

The Lump Sum Allowance caps how much tax-free cash you can take across your lifetime at £268,275 (25% of the old £1,073,100 lifetime allowance). For a single withdrawal, that just means 25% of the amount you're crystallising, capped at that figure — most people with pots under roughly £1.07 million never hit the cap. If you've already taken tax-free cash from other pensions, your remaining allowance is lower than £268,275, which this calculator doesn't track across pots.

Emergency tax, and how to reclaim it

The first time you take a flexible withdrawal from a pension, your provider often has no idea what your income will be for the rest of the year, so HMRC's systems can apply an emergency 'Month 1' tax code. That taxes the withdrawal as if you were going to receive the same amount every month for the rest of the tax year — which massively overstates a one-off withdrawal, and routinely results in far more tax being deducted at source than is actually owed.

You don't have to wait until the following tax return to get it back. If you've fully withdrawn a pot and won't take another payment this year, form P50Z gets an in-year refund. If you've taken a withdrawal but the pot isn't empty, P55 covers most cases where you're not otherwise employed or claiming benefits that tax year, and P53Z applies if you're also claiming a taxable state benefit. Failing that, the overpayment is corrected automatically when HMRC processes your self-assessment return or reconciles your tax position after the year ends — it isn't lost, just delayed.

Scottish taxpayers

If your main residence is in Scotland, the taxable portion of your withdrawal is taxed against the Scottish income tax bands rather than the rest-of-UK ones — Scotland has more bands, including a 21% intermediate rate and rates reaching 45% and 48% at the top, which kick in at different income levels than the rUK 40% and 45% bands. Toggle Scottish taxpayer above to switch the calculation.

Common mistakes people make

The biggest one is treating the emergency tax deduction as the final bill and assuming you've been shortchanged permanently. It's usually a temporary overpayment, correctable through the forms above or your tax return.

The second is withdrawing a large pot in one go without checking what it does to your total income for the year — a big taxable slice landing in a single tax year can easily push a chunk of it into the 40% or 45% band, even if your normal income never gets close. Spreading withdrawals across tax years, where that fits your circumstances, often reduces the total tax paid quite substantially, though whether that suits you depends on your wider situation.

The third is forgetting that only the withdrawal amount matters for this year's tax — money left in drawdown under the 'take 25% up front' route isn't taxed until you actually draw it, so comparing that route's '£0 tax due' against a full withdrawal's tax bill isn't really comparing like with like.

Frequently asked questions

Is the 25% tax-free lump sum always exactly 25% of my pot?

It's 25% of whatever you crystallise, capped by your remaining Lump Sum Allowance (£268,275 across your lifetime, minus any tax-free cash you've already taken from other pensions). For most pots under around £1.07 million, taken in one go with no prior withdrawals, it's simply 25% of the amount you're taking.

What's the difference between UFPLS and taking 25% then drawdown?

With UFPLS, every withdrawal is split 25% tax-free and 75% taxable on the spot. With '25% then drawdown', you crystallise an amount, take the whole 25% as tax-free cash immediately, and the 75% sits in drawdown untaxed until you actually draw it out — which could be years later, in smaller, more tax-efficient chunks.

Why was I taxed so much on my first pension withdrawal?

Almost certainly emergency tax — HMRC's 'Month 1' basis assumes you'll take the same withdrawal every month for the rest of the year, which usually massively overtaxes a one-off payment. You can reclaim the difference in-year using form P55, P53Z or P50Z depending on your circumstances, or it corrects itself when your tax position is reconciled after the tax year ends.

Does taking a big lump sum affect my other tax and benefits?

It can. A large taxable withdrawal counts as income for that tax year, which can affect things like the personal allowance taper above £100,000, Tax-Free Childcare eligibility, and the High Income Child Benefit Charge, depending on your circumstances. It's worth checking those separately if any apply to you.

Do I have to take my tax-free cash all at once?

No. Most modern pensions let you crystallise in stages, taking tax-free cash and moving the rest into drawdown gradually rather than all at once — often called phased drawdown. That can spread the taxable income from later withdrawals across more tax years, which this calculator's single-year figures don't model.