Enter how much you want to draw from your pension and your income tax band to see the 25% tax-free portion, the tax on the rest, and what you receive.
How a UK pension drawdown is taxed
For most withdrawals, a quarter is tax-free and the rest is taxed as income at your marginal rate.
Worked example. Drawing £20,000 as a basic-rate taxpayer: £5,000 is tax-free, £15,000 is taxed at 20% for a £3,000 bill, so you receive £17,000.
The split
- 25% of the withdrawal is tax-free (within the £268,275 Lump Sum Allowance).
- 75% is taxed as income at your marginal rate.
A big withdrawal can push part of the taxable slice into a higher band, and HMRC often applies an emergency tax code on the first payment, so the result is an estimate.
Source: gov.uk tax on pension withdrawals. This is an estimate, not financial advice.
Frequently asked questions
How is a pension drawdown taxed?
Usually 25% of each withdrawal is tax-free and the other 75% is taxed as income at your marginal rate. Drawing £20,000 as a basic-rate taxpayer gives £5,000 tax-free and £15,000 taxed at 20%, a £3,000 bill, so you receive £17,000.
What does this not cover?
It assumes your withdrawal is within the £268,275 Lump Sum Allowance and that the taxable part all falls in the band you pick. A large withdrawal can push you into a higher band, and emergency tax codes can mean HMRC over-deducts at first, so treat this as an estimate.