Pension Lump Sum Calculator
In the UK, you can usually take up to 25% of your pension pot as a tax-free lump sum. For the 2024/25 tax year, the maximum tax-free cash is capped at £268,275 (the former lifetime allowance). The remaining pot can be used for drawdown or to purchase an annuity.
Your pension details
Enter your pension pot value and choose how much to take as a lump sum.
Related: Pension Calculator · Retirement Savings
How the Pension Lump Sum Calculator works
When you reach pension access age (currently 55, rising to 57 in 2028), you can take up to 25% of your defined contribution pension pot as a tax-free lump sum. For the 2024/25 tax year, this is capped at £268,275 — a figure inherited from the old lifetime allowance. Any lump sum above this cap is treated as taxable income and charged at your marginal rate.
This calculator shows you how much of your pot you can take tax-free, how much will remain for drawdown or an annuity, and an estimate of the annual income that remaining pot could generate. The drawdown rate you enter (commonly 4%) represents the percentage of the pot you plan to withdraw each year.
These are illustrative figures only. Pension rules are complex and change regularly. Always speak to a regulated financial adviser or contact MoneyHelper (moneyhelper.org.uk) before making pension decisions.
Frequently asked questions
How much tax-free cash can I take from my pension?
In the UK, you can generally take up to 25% of your pension pot as a tax-free lump sum. For the 2024/25 tax year, this is capped at £268,275 — the former lifetime allowance limit. Any amount above this cap is taxed as income at your marginal rate.
What happens to my pension pot after I take a lump sum?
After taking your tax-free lump sum, the remaining pot stays invested and can be used for income drawdown or to purchase an annuity. With drawdown, your money remains invested and you withdraw income as needed. With an annuity, you exchange the pot for a guaranteed income for life.
Should I take a pension lump sum or regular income?
This depends on your personal circumstances. Taking the full 25% tax-free lump sum is popular, but it reduces the pot available for ongoing income. Some people prefer to take smaller lump sums over time using Uncrystallised Fund Pension Lump Sum (UFPLS) withdrawals. A regulated financial adviser can help you choose the most tax-efficient approach.
Does taking a lump sum affect my State Pension?
No — taking a lump sum from a private or workplace pension does not affect your UK State Pension entitlement. The State Pension is based solely on your National Insurance contribution record, not on how you access private pension savings.