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New - May 2026

Pension Lump Sum Tax Calculator: 2026/27

See how much tax you'll pay on a pension lump sum withdrawal - and how much you could save by spreading it over multiple years.

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This calculates the withdrawal needed to achieve your target income based on current tax rules. It does not assess whether this withdrawal is suitable for your circumstances. Consider speaking to a regulated financial adviser or booking a free Pension Wise appointment.
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Your Pension(s)
Pension 1
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Lump Sum Allowance
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Emergency Tax
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How Pension Lump Sum Tax Works

When you withdraw money from your pension, typically 25% is tax-free and the rest is taxed as income. But the detail matters - how much is genuinely tax-free depends on your The cap on tax-free pension lump sums since the Lifetime Allowance was abolished - £268,275 across all your pensions for 2026/27. The taxable 75% sits outside it. (£268,275), your withdrawal method, and whether you have multiple pensions competing for the same allowance.

The Lump Sum Allowance

The LSA replaced the old Lifetime Allowance in April 2024. It caps the total amount you can take tax-free across all your pensions at £268,275. Once you've used it, every penny of further withdrawals is taxable income. This calculator tracks your LSA across multiple pots and warns you when you're approaching or exceeding the cap.

PCLS vs UFPLS

Pension Commencement Lump Sum: The tax-free lump sum you can usually take from a pension, normally up to 25% of the pot, subject to the lump sum allowance. (Pension Commencement Lump Sum) takes 25% tax-free upfront. The remaining 75% moves into drawdown, where every withdrawal is fully taxable. Uncrystallised Funds Pension Lump Sum: Taking pension money in chunks where each withdrawal is 25% tax-free and 75% taxed as income, without moving the whole pot into drawdown. (Uncrystallised Funds Pension Lump Sum) splits each withdrawal into 25% tax-free and 75% taxable - making it more flexible for phased withdrawals.

The Emergency Tax Trap

If your pension provider doesn't have an up-to-date tax code from HMRC for your new pension income, they'll apply the standard A temporary Month-1 tax code a provider applies to a first pension withdrawal before HMRC issues a proper code. It annualises the payment and usually over-taxes it; you reclaim the excess. 1257L on a Month 1 basis. You still get 1/12 of your Personal Allowance, but only one month's slice of each tax band, and the payment is annualised as if you'll receive it every month - so a one-off withdrawal is heavily over-taxed. (If you have no Personal Allowance available - income over £125,140 - the harsher 0T code applies instead.) The good news: you can reclaim the overpayment using HMRC form P55, P53Z, or P50Z - this calculator tells you which one and links you directly to the form.

Why Spreading Withdrawals Saves Tax

Taking a large lump sum in a single tax year can push you into higher tax bands - or even trigger the Personal Allowance taper (losing £1 of allowance for every £2 over £100,000). By splitting withdrawals across two or three years, you keep more income in lower bands each year. The multi-year comparison shows exactly how much you could save.

Spreading a pension withdrawal across years cuts the tax A £100,000 withdrawal taken as your only income costs about £17,400 in tax if taken in one year, but about £7,500 if spread over three years - a saving of roughly £9,900. Spreading a £100,000 withdrawal cuts the tax All in one year ~£17,400 Over 3 years ~£7,500 Illustrative: £100,000 UFPLS as your only income - you save about £9,900.
Spreading withdrawals keeps more in the basic-rate band each year. The calculator models your own figures.

Related: our guide to pension lump sum tax explains the rules in full; see also the pension annual allowance and the State Pension top-up calculator. Planning a drawdown rate? Check what inflation actually does to retired households - and to your own basket - with the Real Cost of Living tracker.

Sources: GOV.UK - Tax on pension lump sums · HMRC PTM171000 (LSA) · Income Tax Rates 2026/27

Frequently Asked Questions

How much of my pension can I take tax-free?

25% of the amount you crystallise, up to the £268,275 Lump Sum Allowance (LSA). The LSA is shared across all your pensions - not per pot.

What is emergency tax on a pension withdrawal?

When your pension provider doesn't have an up-to-date tax code for you, they apply the standard emergency code 1257L on a Month 1 basis - treating each payment as if you'll receive it every month of the year. You still get 1/12 of your Personal Allowance, but only one month's slice of each tax band, so a one-off withdrawal is typically over-taxed. (If you have no Personal Allowance available - income over £125,140 - the harsher 0T code applies.) You can reclaim the difference from HMRC.

Which HMRC form do I use to reclaim overpaid pension tax?

P55 if you took part of your pot (most common). P53Z if you emptied the entire pot and still have other income. P50Z if you emptied the pot and have no other income or benefits.

What is the difference between PCLS and UFPLS?

PCLS (Pension Commencement Lump Sum) takes 25% tax-free upfront, with the rest going into drawdown - all future withdrawals are fully taxable. UFPLS (Uncrystallised Funds Pension Lump Sum) splits each withdrawal into 25% tax-free and 75% taxable, making it better suited for phased withdrawals.

Does taking a pension lump sum affect my Personal Allowance?

It can. If your total income (salary plus pension withdrawal) exceeds £100,000, your Personal Allowance tapers - you lose £1 of allowance for every £2 over £100,000. This creates an effective marginal rate above 40%, sometimes exceeding the 45% additional rate.

Can I spread my pension withdrawal over multiple tax years to pay less tax?

Yes. By spreading withdrawals across two or three tax years, you keep more income in lower tax bands each year. Use the multi-year comparison panel in this calculator to see the potential saving for your situation.

Do Scottish taxpayers pay different tax on pension withdrawals?

Yes. Scottish residents pay income tax at Scottish rates, which range from 19% (Starter) to 48% (Top rate) for 2026/27. These differ from the rest of the UK rates (20% to 45%). Emergency tax for Scottish taxpayers also uses Scottish bands under an S-prefix tax code.