Pension withdrawal tax calculator 2026/27
Take a lump sum from your pension and the amount that arrives is often thousands of pounds short. The provider usually has no tax code for you, so it uses an emergency one that treats the payment as if you'd receive the same again every month. This shows what is likely to be deducted, what is really due, and how to get the difference back.
What will actually land in your account?
Enter the withdrawal and your other income. You'll see the tax your provider is likely to take, the tax really due, and the gap between the two.
The amount before any tax is taken off.
A lump sum straight from an untouched pot is usually 25% tax-free. Income from a drawdown pot where you've already had your tax-free cash is all taxable.
Salary, other pensions, State Pension and rental profit for the whole tax year, 6 April to 5 April.
A first taxable payment is almost always taxed on an emergency code.
For guidance only. This is not financial or tax advice. It uses 2026/27 income tax rules for England, Wales and Northern Ireland, assumes a standard 1257L emergency code on a month 1 basis, and ignores savings and dividend income. Your provider's actual deduction may differ.
If reading this raised a question about your own situation, get in touch.
Who this calculator is for
Anyone about to take money from a defined contribution pension for the first time: a one-off lump sum, the first drawdown payment, or cashing in a small pot. It's also useful if a withdrawal has already been paid and the tax looks far too high.
The 2026/27 rules it uses
- 2026/27 income tax bands for England, Wales and Northern Ireland, including the personal allowance taper above £100,000.
- Emergency code 1257L on a month 1 basis: one twelfth of the personal allowance and of each tax band applied to a single payment.
- Up to 25% of an uncrystallised withdrawal paid tax-free, with the rest taxed as income.
- Reclaim forms P55, P53Z and P50Z, chosen by whether the pot is emptied and whether you have other income.
- The money purchase annual allowance of £10,000 once taxable income is taken flexibly.
Frequently asked questions
Why is so much tax taken from my first pension withdrawal?
Your provider usually doesn't hold a tax code for you, so it has to use an emergency code on what's called a month 1 basis. That gives you one twelfth of your personal allowance and one twelfth of each tax band, as though you'll get the same payment every month. On a large one-off payment, much of it is taxed at 40% or 45% even if you're a basic-rate taxpayer.
How do I claim back emergency tax on a pension?
Use form P55 if you've taken part of the pot and won't take more this tax year, P53Z if you've emptied the pot and have other income, or P50Z if you've emptied it and have no other income. All three are on gov.uk. Refunds usually arrive within a few weeks. If you don't claim, HMRC should put it right after the tax year ends.
Can I avoid emergency tax altogether?
Often, yes. Taking a small taxable withdrawal first prompts HMRC to issue your provider with a proper tax code. The larger payment that follows is then taxed on that code. Not every provider allows very small withdrawals, so ask first.
Is the 25% tax-free cash affected?
No. Tax-free cash is paid without deduction and doesn't count as income. Only the taxable part is hit by the emergency code.
Educational estimate, not financial or tax advice. Your provider's deduction depends on the tax code it holds for you, and taking money from a pension is a significant decision. Consider speaking to a regulated adviser or Pension Wise first.