UK Pension Drawdown Calculator 2026/27

Model UK flexi-access pension drawdown for 2026/27 - the 25% tax-free lump sum, Income Tax on drawdown, the MPAA trigger and the £268,275 Lump Sum Allowance.

Pensions & Retirement

Worked scenarios

£250k pot - 25% PCLS only at age 60 (no taxable income)

£62,500 net

PCLS £62,500 - taxable £0 - tax £0

MPAA: not triggered - pot left £187,500
£500k pot - £30k drawdown alongside a full new State Pension

£30,000 net

PCLS £30,000 - taxable £0 - tax £0

MPAA: not triggered - pot left £470,000
£1m pot - 4% withdrawal at age 65, with a full new State Pension

£40,000 net

PCLS £40,000 - taxable £0 - tax £0

MPAA: not triggered - pot left £960,000
£1.5m pot - Lump Sum Allowance caps the tax-free portion

£354,521 net

PCLS £268,275 - taxable £131,725 - tax £45,479

MPAA: triggered - pot left £1,100,000

Longevity and capital risk. This calculator models the income tax due on a single year's drawdown. It does not model investment returns on the underlying pension pot, inflation, sequence-of-returns risk or how long the pot will sustain a given withdrawal rate against an uncertain life expectancy. Defined-contribution drawdown carries the risk that you outlive the pot, that poor early-year returns permanently impair sustainability, and that triggering the Money Purchase Annual Allowance limits any future tax-relieved contributions to £10,000. This page is for illustration only and is not regulated financial advice. For a retirement income plan, speak to an FCA-authorised pensions adviser, or use MoneyHelper's Pension Wise guidance service.

How UK pension drawdown works

Since April 2015, the UK pension freedoms have usually allowed anyone aged 55 or over (rising to 57 from 6 April 2028, with protected ages for some members) to access a defined-contribution (DC) pension flexibly. Instead of being forced to buy an annuity, you can take cash directly from the pot - in one go, in regular instalments, or in irregular ad-hoc lumps - and tax is applied as the cash flows out.

This calculator models flexi-access drawdown: you crystallise a tranche of the pot, take up to 25% as a tax-free Pension Commencement Lump Sum (PCLS), and the remaining 75% moves into a drawdown wrapper that you can draw income from at any rate you like. Income is taxed at your marginal Income Tax rate via PAYE, but - critically - National Insurance does not apply to pension income, which makes drawdown more efficient than equivalent earned income on the NI side.

The 25% tax-free rule and the Lump Sum Allowance

The headline figure is the 25% tax-free lump sum. On a £100,000 pot, that’s £25,000 in PCLS payable on crystallisation; on a £500,000 pot, it’s £125,000. The remaining 75% sits in the drawdown wrapper as taxable income when drawn.

Since 6 April 2024, the lifetime tax-free entitlement is capped by the £268,275 Lump Sum Allowance (LSA) - the post-LTA-abolition replacement for the old Lifetime Allowance regime. Below £1,073,100 of total crystallised pensions (four times the LSA) the practical rule remains “25% of each crystallisation”; above it, the LSA becomes the binding constraint unless you hold a protection. There’s also a higher £1,073,100 Lump Sum and Death Benefit Allowance (LSDBA) that caps total tax-free lump sums paid out across your lifetime AND on your death - relevant for very large pension pots passed to beneficiaries.

The calculator allocates your requested drawdown amount as PCLS first (up to the remaining LSA headroom) and treats the rest as taxable income. If you’ve already taken PCLS in earlier years - say £200,000 of the £268,275 LSA already used - only £68,275 of tax-free headroom remains, even on a pot whose 25% would notionally be much larger.

The Money Purchase Annual Allowance (MPAA) trigger

The single biggest “gotcha” of flexi-access drawdown is the Money Purchase Annual Allowance. The moment you take any taxable drawdown income - even £1 - the MPAA fires: from that point forward, DC contributions above £10,000 a year (down from the standard £60,000 allowance) trigger an annual allowance charge on the excess. Once triggered, the MPAA cannot be undone, and unused MPAA cannot be carried forward (gov.uk).

Importantly, taking the 25% PCLS on its own - with no taxable income from the same crystallisation event - does not trigger the MPAA. This matters for savers who are still working and want to ring-fence their full £60,000 annual contribution allowance: take the lump sum to clear the mortgage or buy a car, but don’t tap the taxable 75% until you’ve fully retired. Once you draw a single pound of taxable income, the MPAA applies to DC contributions from the day after that payment and in every later tax year.

The MPAA also applies to UFPLS withdrawals (see below), and to the other “flexible access” events listed in HMRC’s Pensions Tax Manual (PTM056520). Defined-benefit savings are not capped by the MPAA itself, but once it is exceeded they are tested against a £50,000 alternative annual allowance (the £60,000 allowance less the £10,000 MPAA).

UFPLS as an alternative

The other main flexible-access route is the Uncrystallised Funds Pension Lump Sum (UFPLS). Instead of crystallising a tranche of the pot into a drawdown wrapper, you take ad-hoc chunks directly from the uncrystallised pot. Each chunk is 25% tax-free and 75% taxable - the same overall split as flexi-access drawdown, but applied chunk-by-chunk rather than as a single upfront PCLS.

UFPLS suits occasional, irregular withdrawals; drawdown suits taking the tax-free cash first and a taxable income later. A UFPLS always triggers the MPAA, because three quarters of each payment is taxable; drawdown triggers it only when you take taxable income. Both are subject to the £268,275 LSA on the tax-free portion.

You can mix the two where your scheme allows it: crystallise part of the pot into drawdown and leave the rest uncrystallised for later UFPLS withdrawals. Once a pot is fully crystallised there is nothing left to take as UFPLS.

Combining drawdown with other income

Drawdown income is non-savings, non-dividend income. It is added to your other income of that kind for the year - salary, State Pension, rental profit - and taxed through the same bands; savings interest and then dividends sit on top of it in the band order (Income Tax Act 2007 s.16).

This is why a large one-off withdrawal can push you into a higher tax band. Take a £50,000 taxable drawdown on top of a £40,000 salary in 2026/27 (England, Wales or Northern Ireland): the salary uses the £12,570 Personal Allowance and £27,430 of the £37,700 basic-rate band, so only £10,270 of the drawdown is taxed at 20% and the rest at 40%. Tax on the drawdown is £17,946. Drawing £25,000 in each of two tax years instead costs £7,946 a year, or £15,892 in total at today’s rates - a saving of £2,054, because less of it reaches the higher-rate band.

Spreading drawdown across multiple tax years is one of the simplest tax-planning levers retirees have. The calculator’s marginal-rate calculation makes the band-crossing cost explicit - useful for sizing each year’s withdrawal to avoid jumping a band.

State Pension stacks on top

The full new State Pension is £241.30 a week for 2026/27 (normally needing 35 qualifying NI years), or £12,547.60 a year over 52 weeks (gov.uk). It is taxable income but is paid without tax taken off: if you also have a private pension, your provider usually collects the tax due on both through your tax code (gov.uk: how your tax is paid).

A full new State Pension uses £12,547.60 of the £12,570 Personal Allowance, leaving £22.40, so almost all drawdown on top of it is taxed. In England, Wales and Northern Ireland the next slice is at 20%; for Scottish taxpayers the first £3,967 above the Personal Allowance is at the 19% starter rate, then 20%.

Taking taxable drawdown also triggers the MPAA, which caps any future defined-contribution saving at £10,000 a year. That rarely matters once you have stopped working, but it does if you plan to keep contributing.

What happens on death

If you die before age 75 with funds still in drawdown (or uncrystallised), your beneficiaries can usually receive them free of Income Tax - as a lump sum, through beneficiary’s drawdown or as an annuity. Lump sums count towards your lump sum and death benefit allowance, and there are time limits for paying or designating the funds (HMRC PTM073000).

If you die from age 75 onwards, beneficiaries pay Income Tax at their own rate on what they draw from the inherited funds.

Unused pension funds are currently usually outside the estate for Inheritance Tax. For deaths on or after 6 April 2027, Finance Act 2026 ss.66-71 bring most unused pension funds and death benefits into the estate. This calculator models Income Tax only; it does not model Inheritance Tax.

Sustainability: an illustration, not a forecast

How long a pot lasts depends on investment returns, inflation, charges, the order in which good and bad years arrive, and how long you live. None of those is known in advance. A 4% initial withdrawal is a commonly quoted rule of thumb, but it is not a guarantee and was not derived from UK data or UK charges.

The calculator’s “sustainability” line is deliberately simple: it scales a 30-year anchor at a 4% withdrawal inversely with your withdrawal rate, so 4% shows 30 years, 8% shows 15 and 2% shows 60. It does not model returns, inflation or charges. Use it to compare withdrawal rates against each other, not to plan around.

Sources

Checked on 1 October 2026:

gov.uk: Tax when you get a pension and How your tax is paid.
gov.uk: Taking your pension early - minimum pension age, ill-health and protected pension ages.
gov.uk: Check if you’ve gone above the money purchase annual allowance - the £10,000 MPAA and the alternative annual allowance.
gov.uk: Annual allowance - what flexible access means.
gov.uk: Lump sum allowance and Abolition of the lifetime allowance from 6 April 2024.
Finance Act 2026 s.66 and s.71 - pensions in the estate for Inheritance Tax, deaths on or after 6 April 2027.

State Pension calculator - the full new State Pension, by qualifying NI years.
Pension Annual Allowance calculator - the £60,000 allowance, tapered to £10,000 above £260,000 adjusted income.
Pension Contribution calculator - the cost of getting money INTO the pot, after tax + NI relief.
Pension IHT calculator (April 2027) - the estate impact of bringing unused pensions into Inheritance Tax.
How UK tax works (primer) - PAYE, marginal rates, and Personal Allowance taper.

Other UK tax calculators that pair with the Pension Drawdown.

Cite or embed - free under CC BY 4.0

Frequently asked questions

When can I access my UK pension pot?

You can normally access a defined-contribution pension from age 55 (rising to 57 from 6 April 2028). Earlier access is only allowed if you retire because of ill health or have a protected pension age (for example a right under a scheme joined before 6 April 2006). If you are expected to live less than a year, are under 75 and your pot is within your lump sum and death benefit allowance, you may be able to take the whole pot tax-free. Once eligible, you can take the whole pot, draw down income flexibly, buy an annuity, or mix all three - this is what 'pension freedoms' has meant since April 2015.

How does the 25% tax-free lump sum work?

Each time you crystallise pension funds, 25% of the crystallised amount can be taken as a tax-free Pension Commencement Lump Sum (PCLS). The remaining 75% is designated for drawdown (or annuity) and is taxable when drawn. Since 6 April 2024 the lifetime tax-free entitlement is capped by the £268,275 Lump Sum Allowance (LSA), which replaced the Lifetime Allowance. The cap only binds once your total crystallised pensions exceed £1,073,100 (four times the LSA), unless you hold a protection.

What is the Money Purchase Annual Allowance (MPAA)?

The MPAA is a £10,000 annual cap on tax-relieved DC pension contributions that bites once you 'flexibly access' your pension - the most common trigger being taking any taxable income from drawdown (even £1). Once triggered, it cannot be undone. DC contributions above £10,000 a year trigger an annual allowance charge on the excess, and carry forward cannot be used to cover it. Taking a 25% PCLS on its own (with no taxable income from the same crystallisation event) does NOT trigger the MPAA - useful for savers who want to ring-fence their future contribution allowance.

How is pension drawdown income taxed?

Taxable drawdown is paid through PAYE by your provider and taxed at the same Income Tax rates as salary. National Insurance does not apply to pension income. Withdrawals stack on top of any other taxable income you have that year (salary, State Pension, rental income), which is why a large one-off withdrawal can push you into a higher band; spreading drawdown across multiple tax years often saves tax.

What happens to my pension when I die?

If you die before age 75, defined-contribution funds can usually be paid to beneficiaries free of Income Tax, subject to time limits for paying or designating them and, for lump sums, your lump sum and death benefit allowance. From age 75 onwards beneficiaries pay Income Tax at their own rate on what they draw. Unused pension funds are currently usually outside the estate for Inheritance Tax, but Finance Act 2026 ss.66-71 bring most of them into the estate for deaths on or after 6 April 2027.

How long will my pension pot last?

Nobody can tell you in advance: it depends on investment returns, inflation, charges and how long you live. A 4% initial withdrawal is a commonly quoted rule of thumb, not a guarantee. This calculator's 'sustainability' figure is a simple illustration, not a forecast: it scales a 30-year anchor at 4% inversely with your withdrawal rate (8% shows 15 years, 2% shows 60) and does not model returns or inflation.

Is UFPLS different from flexi-access drawdown?

Uncrystallised Funds Pension Lump Sum (UFPLS) lets you take ad-hoc chunks straight from the uncrystallised pot, with 25% of each chunk tax-free and 75% taxable. Flexi-access drawdown by contrast crystallises a tranche of the pot upfront - 25% PCLS paid at that point, 75% moved into a drawdown wrapper from which you can take income flexibly. A UFPLS always triggers the MPAA; drawdown triggers it when you first take taxable income. Both are subject to the £268,275 Lump Sum Allowance on the tax-free portion. UFPLS suits ad-hoc withdrawals; drawdown suits regular retirement income.