2026/27 Pension Freedoms • Statutory Drawdown

After Tax Withdrawal Calculator UK

Estimate tax on a pension withdrawal after entering other taxable income and remaining tax-free lump sum allowance. Emergency PAYE withholding is not modelled.

25% Tax-Free PCLS
Emergency Month 1 Reclaim
UFPLS vs Drawdown

2026/27 estimate

Pension withdrawal estimate

Estimates the extra Income Tax caused by the taxable part of this withdrawal. It does not calculate National Insurance or emergency PAYE withholding.

Tax-free cash

£5,000.00

Taxable withdrawal

£15,000.00

Additional Income Tax estimate

£3,000.00

Net cash after estimated tax

£17,000.00

Assumes a standard 25% tax-free share, limited by the remaining Lump Sum Allowance (maximum £268,275). Income Tax uses the site's England, Wales and Northern Ireland annual bands and the difference in tax before and after the taxable withdrawal. Assumes no Scottish rates, other reliefs, benefits, National Insurance, or student loan deductions.

Authored by: AfterTaxUK Editorial Team • Updated: 2026/27 Tax Year
Governed by Finance Act 2004 Part 4 & SI 2003/2682 PAYE Regulations

How UK Pension Withdrawals Are Taxed (2026/27)

Under the UK Pension Freedoms legislation codified in Part 4 of the Finance Act 2004, eligible individuals aged 55 and over (rising to 57 on 6 April 2028) can access their defined contribution workplace pensions and SIPPs without purchasing an annuity.

However, withdrawals are not entirely tax-free. Every withdrawal is governed by a statutory two-tier division:

25% Tax-Free Portion (PCLS)

You can take up to 25% of your uncrystallised pension fund completely tax-free as a Pension Commencement Lump Sum (PCLS). Following the abolition of the Lifetime Allowance, the maximum tax-free cash you can take across all pensions is capped at the statutory Lump Sum Allowance of £268,275.

75% Taxable Portion

The remaining 75% of your withdrawal is treated as taxable earned income under ITEPA 2003. It is added to your other taxable income (such as State Pension, rental profits, or salary) and subjected to PAYE Income Tax bands (20%, 40%, or 45%). Zero employee National Insurance is deducted from pension income.

Beware the HMRC "Month 1" Emergency Tax Code Trap

Under the Income Tax (Pay As You Earn) Regulations 2003 (SI 2003/2682), pension schemes must apply an emergency Month 1 (non-cumulative) tax code to your initial taxable withdrawal. Payroll software treats that single withdrawal as if it will be repeated every month for the rest of the tax year, often resulting in 40% or 45% tax deductions on amounts intended for basic rate taxation.

Statutory Remedy: You can reclaim overpaid tax immediately from HMRC within 30 days using Form P55 (for partial withdrawals), Form P53Z (if emptying the pot with other earnings), or Form P50Z (if emptying the pot with no other income).

The Money Purchase Annual Allowance (MPAA): £10,000 Restriction

Under Section 227ZA of the Finance Act 2004, accessing taxable income from a defined contribution pension triggers the statutory Money Purchase Annual Allowance (MPAA).

Once triggered, your maximum annual tax-relieved pension contribution limit is slashed from £60,000 down to £10,000 per tax year, and you forfeit the right to carry forward unused allowances from previous tax years. Crucially, taking only your 25% tax-free PCLS cash without touching the taxable 75% does not trigger the MPAA, allowing you to continue contributing up to £60,000 per year.

Frequently Asked Questions: UK Pension Withdrawals

Clear answers based on official HMRC rules and statutory guidance.

Under the pension freedoms framework in Part 4 of the Finance Act 2004, you can access defined contribution pensions from age 55 (rising to 57 on 6 April 2028). Up to 25% of your uncrystallised pot can be taken completely tax-free as a Pension Commencement Lump Sum (PCLS), capped at the statutory Lump Sum Allowance of £268,275. The remaining part is treated as taxable pension income and taxed at your marginal Income Tax rate (20%, 40%, or 45%) under PAYE.
Produced by the AfterTaxUK Editorial Team

Authored and verified by UK pension specialists in accordance with the Finance Act 2004 (Part 4), Income Tax (Pay As You Earn) Regulations 2003 (SI 2003/2682), and Finance Act 2024 (Lump Sum Allowance). Calculations reflect the 2026/27 tax year.

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Choose the income type and whether it is inside a valid ISA or pension wrapper. A selected tax-band illustration does not calculate every interaction with your other income.

The starting rate for savings, Personal Savings Allowance and dividend allowance have different rules. Selling an investment can create a capital gain; withdrawing your own capital is not automatically taxable income.

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Official guidance supports the rules described here; it does not approve or certify this calculator. Confirm dates, eligibility and unsupported cases before making a financial decision.