Pension Drawdown Calculator UK

Since the 2015 pension freedoms, anyone aged 55+ (rising to 57 from 6 April 2028) can leave a Defined Contribution pension invested and draw an income from it. You stay invested for potential growth but bear the investment risk yourself, the opposite of an annuity.

The pot continues to belong to you. On death, it can usually be passed to beneficiaries free of IHT (though that's changing from April 2027, see below).

You can usually take 25% of your pension as a tax-free lump sum (the "Pension Commencement Lump Sum"). The lifetime cap on tax-free PCLS is £268,275 (formerly £1.073m × 25%). Anything above that PCLS limit is taxed at marginal income tax rates.

You don't have to take it all at once: under UFPLS or phased drawdown, 25% of each withdrawal can be tax-free.

Everything beyond the 25% tax-free lump sum is taxed as income at your marginal rate: 20% / 40% / 45% in England, Wales and Northern Ireland, or the six Scottish rates. The gross/tax/net figures above apply the 2026/27 rUK bands to each year's withdrawal, stacked on top of any other income you entered.

Drawdown also counts as income for the High Income Child Benefit Charge, Marriage Allowance eligibility and the Personal Allowance taper above £100,000. A large one-off withdrawal can push you into the 60% effective band between £100,000 and £125,140.

A common strategy is to draw just enough each year to use the Personal Allowance and basic-rate band, keeping withdrawals out of 40% territory, and to spread a big purchase across two tax years.

Note: your provider will usually apply an emergency "month 1" tax code to a first withdrawal, over-taxing it. You reclaim the excess from HMRC with form P55, P53Z or P50Z.