What this calculator does
UK pensions allow you to take 25% of your pension pot tax-free under one of two main patterns: PCLS (Pension Commencement Lump Sum) takes the whole 25% upfront and crystallises the remaining 75% into drawdown. UFPLS (Uncrystallised Funds Pension Lump Sum) takes 25% tax-free and 75% taxable from each individual withdrawal, spreading the tax-free element across multiple years. This calculator models both patterns side-by-side and shows the income tax difference on a representative withdrawal plan.
Your pension and circumstances
Which pattern wins, and when
Below the Lump Sum Allowance (£268,275), the total tax-free element is identical in both patterns — they just deliver it on different timetables. The decision usually comes down to:
- How much taxable drawdown income you take each year. If your annual taxable drawdown alone keeps you below the higher-rate threshold (£50,270), the PCLS-upfront pattern usually wins — you keep the rest growing tax-deferred and you don't accidentally cross the threshold by adding a 75% taxable slice from each withdrawal.
- What you'd do with the lump sum. If it just sits in a low-yield current account, you've moved tax-free pension growth into taxable savings interest. If it goes into an ISA / S&S ISA / mortgage payoff, that's a meaningful improvement.
- Inheritance planning. Pension assets pass tax-free to nominees if death is before age 75 (and at the recipient's marginal rate after 75). Money outside the pension is in your estate and may face IHT. This makes the UFPLS pattern more attractive for estate purposes — you keep more inside the wrapper for longer.
The Lump Sum Allowance — the cap on tax-free withdrawals
The £268,275 Lump Sum Allowance (LSA), introduced when the Lifetime Allowance was abolished in April 2024, caps the total tax-free lump-sum element you can take across all your pensions in your lifetime. It's roughly 25% of the old £1,073,100 Lifetime Allowance. For a single pension worth less than £1,073,100 the LSA never bites; for very large pots it does.
Above the LSA, what would have been the tax-free 25% becomes taxable at marginal income tax rates. Most people will never hit it, but high earners with multiple pensions or DB-style salary-sacrifice schemes can.
Common mistakes
- Taking the entire 25% as PCLS without a plan for the cash. A £125,000 lump sum sitting in a 4% savings account earns £5,000/year of taxable interest — well above the Personal Savings Allowance. Better moved into ISAs over multiple years if not needed soon.
- Triggering Money Purchase Annual Allowance (MPAA). Once you flexibly access a defined-contribution pension via UFPLS or drawdown, your future pension contribution allowance is limited to £10,000/year (down from £60,000). For people still working, this can be a major constraint.
- Forgetting that drawing taxable pension income stacks with other income. A £20,000 drawdown taken as 100% taxable (without using PCLS first) sits on top of your State Pension and pushes some of it into the higher-rate band.
- Using the same provider's drawdown product without comparing fees. Drawdown fees vary widely — 0.15% to 0.75% of the pot per year — and compound just like investment returns in reverse.
Related calculators
Use the pension drawdown tax calculator for the year-by-year tax bill on a specific drawdown pattern. The pension calculator projects pot growth before retirement. The State Pension forecast calculator shows your other taxable income in retirement. The FIRE calculator combines pot, withdrawal rate and State Pension age into one view.