About the UK Tax-Free Pension Lump Sum Calculator
This UK pension lump sum calculator shows how much of a defined contribution pension you can take tax-free and how much tax you will pay on the rest in the 2026/27 tax year. Choose between taking a tax-free lump sum (pension commencement lump sum) and moving the rest into drawdown, or taking cash as an uncrystallised funds pension lump sum (UFPLS) where every withdrawal is 25% tax-free and 75% taxable.
Tax-free cash is normally 25% of the amount you crystallise, capped by the lump sum allowance of £268,275 across all your pensions unless you hold a protected allowance. The taxable part of a UFPLS is added to your other income for the year, so a large withdrawal can push you into the higher or additional-rate band and even remove your Personal Allowance. The calculator shows that marginal tax, the net cash you receive and whether you trigger the £10,000 money purchase annual allowance.
Use it before you contact your provider, compare taking everything at once with spreading withdrawals over several tax years, and remember that the first taxable payment is often taxed on an emergency code — any overpayment can be reclaimed from HMRC. Defined benefit schemes calculate tax-free cash differently using a commutation factor.
With the default inputs, the tax-free cash is £50,000.00. Change any value above to recalculate instantly.
How to use the uk tax-free pension lump sum calculator
- 1Enter your pension pot value and how you want to take the money.
- 2Enter the amount to crystallise or withdraw — the whole pot to take everything.
- 3Add any lump sum allowance already used and your other income this tax year.
- 4Choose Scotland if you are a Scottish taxpayer.
- 5Compare the net cash and tax with a smaller withdrawal or one spread over two tax years.
Formula and method
When you crystallise an amount A of a defined contribution pension, up to 25% can be paid tax-free, as long as your total tax-free lump sums stay within the lump sum allowance (£268,275 unless you hold a protected allowance). With a pension commencement lump sum the remaining 75% moves into drawdown and is only taxed when you take it. With a UFPLS each withdrawal is paid as cash: 25% tax-free and 75% taxable as pension income in the tax year you receive it.
Income Tax is calculated with 2026/27 bands as the extra tax caused by adding the taxable part to your other income, so it includes the loss of Personal Allowance above £100,000. Tax for England, Wales and Northern Ireland uses 20%, 40% and 45% rates; Scotland uses its six bands from 19% to 48%. Taking taxable cash flexibly reduces the annual allowance for future money purchase contributions to £10,000.
- A
- Amount crystallised or withdrawn
- LSA
- Lump sum allowance (£268,275)
- Tax(x)
- 2026/27 Income Tax on non-savings income x
Worked examples
£200,000 pot, 25% tax-free and the rest into drawdown
Crystallising the whole £200,000 releases £50,000 tax-free and moves £150,000 into drawdown, where it stays invested until you take income. No tax is due now and £218,275 of lump sum allowance remains.
£40,000 UFPLS with £15,000 other income
A £40,000 UFPLS is £10,000 tax-free and £30,000 taxable. Added to £15,000 of other income, total income is £45,000 — still within the basic-rate band — so the extra tax is 20% of £30,000 = £6,000 and you receive £34,000.
£1.5m pot — capped by the lump sum allowance
25% of £1.5 million would be £375,000, but tax-free cash is capped at the £268,275 lump sum allowance. The remaining £1,231,725 goes into drawdown and is taxable when withdrawn.
Cashing in a £100,000 pot in one go
Taking all £100,000 as cash gives £25,000 tax-free and £75,000 taxable on top of £12,570 of income. £37,700 is taxed at 20% and £37,300 at 40%, a £22,460 bill, leaving £77,540.
Frequently asked questions
How much of my pension can I take tax-free?+
Usually 25% of the amount you crystallise from a defined contribution pension, up to a lifetime maximum of £268,275 in tax-free lump sums (the lump sum allowance), unless you hold a protected allowance from earlier lifetime allowance protections.
What is UFPLS?+
An uncrystallised funds pension lump sum is a cash withdrawal straight from an untouched pension pot. Each payment is 25% tax-free and 75% taxed as income, and taking one triggers the £10,000 money purchase annual allowance for future contributions.
What is the lump sum allowance?+
Since the lifetime allowance was abolished on 6 April 2024, tax-free lump sums are limited to £268,275 in total. A separate lump sum and death benefit allowance of £1,073,100 covers serious ill-health and certain death benefit lump sums.
When can I take my tax-free lump sum?+
Most private and workplace pensions let you take benefits from age 55, rising to 57 from 6 April 2028 unless you have a protected pension age. You do not need to stop working to take tax-free cash.
Why was I taxed so much on my pension withdrawal?+
Providers often apply an emergency tax code to the first taxable payment and assume you will receive the same amount every month. You can reclaim the overpayment from HMRC using forms P55, P53Z or P50Z, or wait for an adjustment after the tax year.
Should I take all my tax-free cash at once?+
Not necessarily. Leaving money invested keeps it growing free of tax, although unused pension funds are due to come into Inheritance Tax from 6 April 2027. Phased UFPLS or phased drawdown lets you take 25% tax-free from each slice over many years, which can spread income more efficiently.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.