Your inputs
Estimated net proceeds
£0
Waiting for a pension withdrawal read.
What this means
This tool separates tax-free cash from the taxable element, then stacks the taxable slice on top of your other income for the year.
Professional read
The tool uses rest-of-UK 2026/27 income tax rates and assumes the withdrawal is authorised and taxed in the year you take it.
Comparing the gross pension withdrawal with your bank receipt and forgetting that only the tax-free slice is untouched by income tax.
If the taxable slice tips you into higher-rate tax, test smaller staged withdrawals or compare the year-end result with other income already expected.
Scottish taxpayers, protected tax-free cash, emergency PAYE month-one codes, and DB/annuity cases need a more tailored review than this first-pass tool.
Methodology and source basis
Built around HMRC's 2026/27 thresholds and GOV.UK pension-withdrawal guidance. It uses the £12,570 Personal Allowance (reduced by £1 for every £2 of income over £100,000), the 25% tax-free rule where it applies, and the rest-of-UK bands: 20% on the first £37,700 of taxable income, 40% up to £125,140 and 45% above. The tax shown is the extra tax caused by the withdrawal: the tool works out tax on your other income alone, then on your other income plus the taxable part of the withdrawal, and reports the difference.
Worked example (the default inputs): a £40,000 withdrawal with 25% tax-free and £18,000 of other income. £10,000 is tax-free; the other £30,000 is added to your income, taking it to £48,000, which is still inside the basic-rate band, so the extra tax is £30,000 × 20% = £6,000 and you keep £34,000. If the same £30,000 taxable slice took your income above £50,270, the part above that would be taxed at 40%.
Rules to keep in mind: you can usually take up to 25% of a pension tax-free, within the £268,275 Lump Sum Allowance across all your pensions. Taking taxable income from flexi-access drawdown, or an uncrystallised funds pension lump sum, counts as flexibly accessing your pension and cuts the amount you can pay into money purchase pensions with tax relief to £10,000 a year (the money purchase annual allowance). The normal minimum pension age is 55, rising to 57 from 6 April 2028. Checked on 3 October 2026.
| Reference | Why it matters |
|---|---|
| GOV.UK pension tax-free rules | The usual 25% tax-free rule, within the £268,275 Lump Sum Allowance. |
| GOV.UK tax on pension | Confirms that the taxable slice is added to your annual income and taxed through the normal income tax system. |
| HMRC 2026/27 rates and thresholds | Updated 1 September 2026: the £12,570 Personal Allowance and the £37,700 basic rate band used here. |
| HMRC pension schemes rates | Updated 6 April 2026: Lump Sum Allowance £268,275, money purchase annual allowance £10,000, minimum pension age rising to 57 from 6 April 2028. |
| GOV.UK: allowances if you have flexibly accessed your pension | When the £10,000 money purchase annual allowance applies. |
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