Pension drawdown calculator
What a pension pot pays after tax, and how many years it lasts at that rate.
- Tax-free lump sum
- £0
- Pot left invested
- £0
- Drawn each year, taxable
- £0
- Income tax on it
- £0
- National Insurance
- £0
- Net from the pension
- £0
A quarter tax free, with a ceiling
You can normally take 25% of a pension pot as a tax-free lump sum. What is less well known is that the tax-free amount is capped in cash terms by the lump sum allowance of £268,275, across all your pensions together. A pot above about £1.07 million cannot take a full quarter tax free, and the excess is taxed as income.
Everything drawn after the lump sum is taxed as ordinary income, stacked on top of your state pension and anything else you receive.
Tax on a lump sum, by size
The tax-free quarter comes first. The remaining three quarters are taxed as income, and with nothing else coming in, the first £12,570 of that is covered by the personal allowance. This table assumes no other income, England, Wales or Northern Ireland, and the whole amount taken in one tax year.
| Taken | Tax free | Taxable | Tax | You keep |
|---|---|---|---|---|
| £10,000 | £2,500 | £7,500 | £0 | £10,000 |
| £20,000 | £5,000 | £15,000 | £486 | £19,514 |
| £40,000 | £10,000 | £30,000 | £3,486 | £36,514 |
| £60,000 | £15,000 | £45,000 | £6,486 | £53,514 |
| £100,000 | £25,000 | £75,000 | £17,432 | £82,568 |
| £200,000 | £50,000 | £150,000 | £53,703 | £146,297 |
Tax year 2026/27. Your provider may deduct emergency tax from a first payment, which you can reclaim.
Cashing in a small pot
A pension worth up to £10,000 can usually be taken in one go, under the small pots rules. GOV.UK says you can take up to three small pot lump sums from different personal pensions, and an unlimited number from different workplace pensions.
For a pot you have not drawn from before, 25% is tax free and the rest is taxed as income, at the rate your income that year puts it in. Drawing the same pot as income first, and taking the remainder as a lump sum, can mean the whole lump sum is taxed.
The thing to check with your provider is the effect on what you can pay in later. Small pot payments are generally not treated as flexibly accessing your pension, which is what triggers the lower money purchase annual allowance. Taking a normal drawdown payment from the same pot instead would be. The rules for your arrangement are set by the provider and by HMRC; see GOV.UK on tax on your private pension.
How long a pot lasts
Years until the pot runs out, after taking the 25% tax-free lump sum, with 4% growth and a flat withdrawal each year. The withdrawal here is before tax.
| Pot | £10,000 a year | £20,000 a year | £30,000 a year |
|---|---|---|---|
| £100,000 | 10 years | 5 years | 3 years |
| £250,000 | 36 years | 12 years | 8 years |
| £400,000 | Does not run out | 24 years | 14 years |
| £600,000 | Does not run out | 59 years | 24 years |
Steady growth and no inflation adjustment. Real markets are uneven, and a bad early run shortens these figures.
No National Insurance, ever
Pension income carries no National Insurance at any age. That makes £30,000 of drawdown meaningfully better than £30,000 of salary, and it is a genuine consideration when deciding whether to keep working part time or draw a little more instead.
Timing is the lever you actually control
Because the taxable part stacks on your income for the year, a large withdrawal in one go can push most of itself into the 40% band. The same total spread across three years might stay almost entirely at 20%. There is rarely a good reason to take a big taxable lump in a single tax year, and the difference can run to five figures.
Watch the personal allowance too. Drawing just enough to use it up, and no more, is frequently the most efficient pattern in the early years of retirement.
Read the projection as a shape, not a forecast
The years figure assumes steady growth at the rate you set, a flat withdrawal, and no inflation adjustment. None of those will hold. Its value is in the sensitivity: change growth from 5% to 3% and watch how many years disappear. That fragility is the honest lesson, and it is why the 4% rule should be treated as a starting point rather than a promise.
What this does not model, and why it matters
The money purchase annual allowance, which sharply limits what you can contribute once you have flexibly accessed a pension. Emergency tax on a first withdrawal, which is common and reclaimable. Defined benefit pensions, which work completely differently. Death benefits and how they meet inheritance tax, an area that has been changing. And inflation.
This is the tool on the site where the gap between a calculation and advice is widest. Retirement decisions are largely irreversible, and an hour with a regulated adviser is cheap against the size of the decision.
Common questions
- Can I take 25% tax free?
- Usually yes, but there is a cash ceiling. The lump sum allowance caps the tax-free amount at £268,275 across all your pensions, so a pot above roughly £1.07 million cannot take a full quarter tax free.
- Do I pay National Insurance on pension income?
- No. Pension income is free of National Insurance entirely, at any age. Drawing £30,000 from a pension therefore leaves you noticeably better off than earning £30,000, which is worth knowing when deciding whether to keep working part time.
- Why is taking a big lump sum in one year so expensive?
- Because the taxable part is stacked on your income for that year. Withdrawing £60,000 in one go can push most of it into the 40% band, where the same amount spread over three years might stay almost entirely at 20%. Timing is the single largest lever you control.
- Is 4% a safe withdrawal rate?
- It is a widely quoted rule of thumb, not a guarantee. It came from historic US market data over 30 year retirements. Try the projection above with lower growth and see how quickly the answer changes; that sensitivity is the real lesson.
- What happens to what is left when I die?
- Pension death benefits have their own rules, which have been changing, and they interact with inheritance tax. This calculator does not model them. It is worth asking a financial adviser specifically about this, because the answer has moved recently.
- What is the small pots rule?
- You can usually cash in a pension worth up to £10,000 in one go. GOV.UK allows up to three small pot lump sums from personal pensions, and any number from workplace pensions. For a pot that has not been drawn from, 25% is tax free and the rest is taxed as income in the year you take it.
- How much tax will I pay on a pension lump sum?
- It depends on the size, because the taxable part stacks on your other income for the year. With no other income in England, Wales or Northern Ireland, taking £60,000 in one go leaves £15,000 tax free and £45,000 taxable, about £6,486 of tax, so you keep £53,514. The table on this page covers other sizes. Your first payment may be taxed on an emergency code, which you can reclaim.
- How long will my pension pot last?
- It depends on the pot, what you take out each year and the growth you assume. At 4% growth, a £400,000 pot after taking the tax-free quarter runs out in 14 years at £30,000 a year and 24 years at £20,000. The second table shows more combinations. It assumes steady growth and no inflation, so read it as a shape rather than a forecast.