Drawing a pension in life
Pension drawdown calculator: the tax on one withdrawal
Type the amount you plan to take this tax year and your other income. The calculator gives the tax, what reaches your account and the rate on the next pound.
Income tax on a pension withdrawal
Income tax on it
£4,500
| Tax free | £7,500 |
| You keep | £25,500 |
| Marginal rate after it | 20 % |
Annual figure. The first payment can be taxed on an emergency code and repaid later.
A pension withdrawal is added to everything else you receive in the same tax year, 6 April 2026 to 5 April 2027, and taxed at your own income tax rates. When the pot has never been touched, each withdrawal taken as an uncrystallised funds pension lump sum is 25 % tax free and the remaining three quarters is income. Someone with £15,000 of other income who takes £30,000 this way pays £4,500 of income tax and keeps £25,500. If the tax-free cash was already taken and the same £30,000 comes out of a drawdown fund, all of it is taxable: the bill rises to £6,000. After the first withdrawal the next pound is taxed at 20 %. Above £100,000 of total income the Personal Allowance shrinks, so a withdrawal that lands between £100,000 and £125,140 is taxed at 60 % on that slice. Tax-free cash is capped at £268,275 over a lifetime unless a protection applies.
Law read and sums checked by Radif Partners · Editorial policy · How the tax is worked out
What the tool needs from you
Three figures matter: the amount you plan to take before the tax year ends, the income you will have anyway (salary, State Pension, rent, another pension), and whether the pot has been touched. The last question decides the tax-free part. GOV.UK's page on tax when you get a pension explains that you can usually take up to 25 % of a pot tax free, with the rest taxed as income, and gives the example of a £60,000 pot of which £15,000 is free. Once the tax-free cash has been taken, every pound of drawdown income is taxable.
One £20,000 withdrawal at five income levels
The same withdrawal from an untouched pot costs very different amounts depending on what else you earn. The table holds the withdrawal still and moves the other income.
| Other income | Tax free | Income tax | You keep | Rate on the next pound |
|---|---|---|---|---|
| £0 | £5,000 | £486 | £19,514 | 20 % |
| £15,000 | £5,000 | £3,000 | £17,000 | 20 % |
| £40,000 | £5,000 | £3,946 | £16,054 | 40 % |
| £60,000 | £5,000 | £6,000 | £14,000 | 40 % |
| £90,000 | £5,000 | £7,000 | £13,000 | 60 % |
With no other income, most of the taxable part falls inside the Personal Allowance of £12,570. With a salary in the higher rate band, the same payment loses a far larger share. The last column is the cost of the next pound drawn.
The band where the next pound costs 60 %
The Personal Allowance is reduced by £1 for every £2 of income above £100,000, so it has gone completely at £125,140. In that stretch each extra pound is taxed at the higher rate and also removes fifty pence of allowance, which is then taxed too. The rates published with the Budget set these limits for 2026/27. Someone already on £95,000 who draws £20,000 of taxable income pays £11,000 on it, an average of 55.0 %. Splitting a large withdrawal across the end of one tax year and the start of the next is one way people keep below the band; the tool shows the effect when you lower the amount.
Scottish taxpayers
Pension income of a Scottish taxpayer is taxed at the Scottish rates, which have six bands. For the default case of £30,000 drawn on top of £15,000, the bill is £4,564 in Scotland against £4,500 elsewhere in the UK.
The first payment can be over-taxed
When a provider makes a first payment without a current tax code, it may use an emergency code, and that first payment can be taxed more than it will finally owe. The excess is repaid later. The calculator works on the whole tax year, so its figure is the tax finally owed, not the amount deducted from the first payment.
What is left in drawdown after death
Money not drawn stays in the pot, and for deaths from 6 April 2027 it is part of the estate for inheritance tax. If the member dies at 75 or over, whoever inherits also pays income tax on what they draw, after a deduction for the inheritance tax borne. HMRC's technical note says the reform does not change the existing position on gifts out of income, and that gifts funded by withdrawals are judged on their facts. Drawing now against leaving money invested is compared on the page on pensions inherited after 75 and, for a whole pot, on the cashing in page. None of this is advice on your own withdrawals; a regulated financial adviser checks a real plan.