Calculate your tax-free pension lump sum (PCLS) and tax on the remainder for 2026-27.
This calculator provides estimates only. Pension lump sum rules are complex and depend on your specific scheme and circumstances. Always consult a financial adviser before making pension decisions.
When you reach age 55 (rising to 57 from 2028), you can normally take up to 25% of your defined contribution pension pot as a tax-free lump sum. This is officially called the Pension Commencement Lump Sum (PCLS), and it is one of the most significant tax-free payments most people ever receive. Since April 2024, the Lifetime Allowance was abolished and replaced by two new allowances. The Lump Sum Allowance (LSA) caps the total tax-free lump sums you can take across all your pension schemes at GBP 268,275. The Lump Sum and Death Benefit Allowance (LSDBA) caps the combined total at GBP 1,073,100. For most people, the LSA of GBP 268,275 is the key limit. If your pension pot is GBP 1,073,100 or less, you can take exactly 25% tax-free (up to GBP 268,275). For larger pots, the tax-free amount is capped, and the remainder is subject to income tax when withdrawn. How you withdraw the remaining 75% has significant tax implications -- taking it all in one year could push you into the additional rate (45%) tax band, while spreading withdrawals can keep you in lower bands. This calculator helps you plan your pension withdrawal strategy by showing the tax-free lump sum available, tracking your Lump Sum Allowance usage, and comparing tax scenarios for the remaining pot. Understanding these figures before you access your pension can save you thousands in unnecessary tax. If you have pension benefits from before April 2024, you may have transitional protection that gives you a higher Lump Sum Allowance. Check with your pension provider if you believe this applies to you.
To calculate your pension lump sum: 1. Enter your pension pot value. This is the current total value of the pension pot you want to access. You can find this on your latest pension statement or by logging into your provider's website. 2. Set the lump sum percentage. The maximum is 25%, but you can choose a lower percentage if you want to keep more in your pension. Slide the control between 0% and 25%. 3. Enter any other pension lump sums already taken. If you have previously taken tax-free lump sums from other pension schemes, enter the total here. This is deducted from your GBP 268,275 Lump Sum Allowance. 4. Review the results. The calculator shows your tax-free lump sum, remaining pot, LSA tracking, and two tax scenarios: withdrawing everything at once versus spreading over 20 years. 5. Use the comparison scenarios to see how different pot sizes affect the tax picture. Pay particular attention to the difference between the two tax scenarios for larger pots.
The pension lump sum calculation follows these steps: 1. Calculate the desired lump sum: pension pot multiplied by the chosen percentage (default 25%) 2. Determine available Lump Sum Allowance: GBP 268,275 minus any previous tax-free lump sums taken from other schemes 3. Tax-free lump sum = the smaller of the desired lump sum and the available LSA 4. Remaining pot = pension pot minus the tax-free lump sum 5. Tax if withdrawn all at once: the remaining pot is treated as income in a single tax year and taxed using 2026-27 income tax bands (0% on GBP 12,570, 20% on GBP 12,571-50,270, 40% on GBP 50,271-125,140, 45% above GBP 125,140) 6. Tax if spread over 20 years: the remaining pot is divided by 20, tax is calculated on each annual amount, and the total is summed. This usually results in significantly less total tax because each year's withdrawal stays in lower tax bands. Note that the "all at once" scenario assumes no other income in that year. In practice, if you have other income (state pension, employment, etc.), your tax bill would be higher.
Inputs: Pension pot: GBP 400,000, Lump sum: 25%, No previous lump sums
Inputs: Pension pot: GBP 1,500,000, Lump sum: 25%, No previous lump sums
Inputs: Pension pot: GBP 200,000, Lump sum: 25%, Previous lump sums: GBP 200,000
The pension lump sum is normally taken at the point you start accessing your pension. With pension drawdown (available since pension freedoms in 2015), you do not have to take it all at once. You can crystallise your pension in stages, taking a proportionate tax-free amount each time. Small pot rules allow you to take the entire pot as a lump sum (25% tax-free, 75% taxed) if the pot is worth GBP 10,000 or less. This applies to up to three small pots from different non-occupational schemes. If you have defined benefit (final salary) pensions, the lump sum calculation works differently. Many DB schemes offer a separate lump sum option, often by commuting part of your annual pension. The commutation rate varies by scheme. The tax scenarios shown assume no other income. If you have state pension income (GBP 12,543 per year at the new full rate), employment income, or rental income, your actual tax bill on pension withdrawals will be higher because the personal allowance and lower tax bands are already used. Taking a large lump sum from your pension may also affect your entitlement to means-tested benefits, your student loan repayments, and your tax code for the following year. Consider taking independent financial advice before making large pension withdrawals.