Pension Withdrawal Tax Calculator (UK)
Estimate the income tax you’ll pay when taking a cash lump sum from your pension pot.
Please Note: Your pension provider may deduct tax using an emergency tax code, which could result in a higher initial tax deduction. You would then need to claim back the overpaid tax from HMRC.
About the Tool
When you start taking money from your defined contribution pension pot, you can usually take 25% of it tax-free. The remaining 75% is taxable as income. This calculator is designed to give you a clear estimate of how much income tax you might pay on a one-off cash withdrawal (known as an Uncrystallised Funds Pension Lump Sum – UFPLS). It works by adding the taxable portion of your withdrawal to your other income for the year, helping you understand the financial impact and plan accordingly.
Key Features of Our Tool
- Instant Tax Calculation: Quickly see how much of your withdrawal is tax-free and how much tax you might owe on the rest.
- Total Income View: The tool combines your pension withdrawal with your other annual income for a more accurate tax estimate.
- UK & Scottish Tax Bands: Our advanced options allow you to switch between the tax bands for the rest of the UK and the specific bands for Scotland.
- Clear Breakdown: Get a simple summary of your tax-free cash, taxable cash, estimated tax, and the final net payment you could receive.
How To Use This Tool
- Enter Withdrawal Amount: Input the total cash amount you plan to withdraw from your pension pot.
- Enter Other Income: Add any other taxable income you expect to receive in the same tax year (e.g., from employment, self-employment, or property).
- Select Location (Optional): Use the advanced options to select your tax location if you are a Scottish taxpayer.
- Click “Calculate Tax”: The tool will instantly show you a breakdown of your withdrawal and the estimated tax due.
Frequently Asked Questions
1. Can I take my whole pension pot as cash?
Yes, from age 55 (rising to 57 in 2028), you can usually take your whole pot as cash. 25% will be tax-free, and the remaining 75% will be taxed as income. Taking a large amount in one go could push you into a higher tax bracket, so it’s important to plan carefully.
2. What is an emergency tax code?
When you first take a taxable payment from your pension, your provider may not have your correct tax code from HMRC. They will often use a temporary ’emergency’ code, which can result in a higher tax deduction initially. You can reclaim any overpaid tax from HMRC.
3. How is this different from pension drawdown?
This calculator is for one-off cash withdrawals (UFPLS). In drawdown, you also take 25% tax-free upfront, but the rest of the pot remains invested, and you ‘draw down’ a taxable income from it as needed. Each option has different tax implications.
4. Do Scottish tax bands make a difference?
Yes. Scotland has different income tax rates and bands compared to the rest of the UK. If you are a Scottish taxpayer, it’s important to use the Scottish bands for an accurate estimate, which you can select in our tool’s advanced options.