UK Pension Drawdown Tax Calculator (2026)

Combined across all DC pensions. For DB pensions, use the Cash Equivalent Transfer Value (CETV) — BUT consult a Pension Transfer Specialist before transferring DB.

If you've already crystallised part of the pot, enter the tax-free portion. Leaves the taxable balance for drawdown modelling.

State pension is taxable but paid gross. Add to any other taxable income (rental, part-time work, other DB pensions).

Your total income goal in retirement — pension drawdown + state pension + other. The tool calculates the drawdown needed to hit this.

Scottish bands if Scotland-resident. 4% real-growth rate is the classic safe assumption; 2–3% for conservative, 5–6% for aggressive.

See tax under your target strategy, the tax-efficient basic-rate alternative, and pot runway to age 100 for both.

UFPLS (Uncrystallised Funds Pension Lump Sum) takes chunks of pension where each chunk is 25% tax-free / 75% taxed at your marginal rate. Flexi-access drawdown fully crystallises the pot, takes 25% PCLS upfront, and drawdowns from the remainder are all taxable. UFPLS is simpler, preserves 25%-tax-free across the life of the pot, and doesn't require a formal crystallisation. Flexi-access is more flexible on timing but commits the tax-free portion. Most modern SIPPs support both — check with provider.

Classic US research (Bengen, 1994) established the "4% rule" — withdraw 4% of initial pot, inflation-linked, pot lasts 30+ years in 95%+ of historical scenarios. UK updates (Drawdown Decisions report, Pensions Policy Institute) suggest 3.5% is safer for UK investors due to sterling depreciation and lower domestic returns. Sequence-of-returns risk: a crash in the first 5 years is catastrophic — the pot draws down AND fails to grow, compounding the damage. Rising-equity-glidepath approaches (starting with 60% equity, rising to 80% over 15 years) mitigate this.

The 2024 Autumn Budget proposed bringing unused pension pots into IHT from April 2027. If enacted, pensions would be counted toward the £325k nil-rate band + £175k residence nil-rate band, potentially taxed at 40% above thresholds. This fundamentally changes pension planning: the "spend ISAs first, keep pension for inheritance" strategy would need to be reversed for estates above £325k. Monitor autumn 2025 Budget for confirmation — until enacted, pre-age-75 pension inheritance remains IHT-free.

State pension age is 66 (rising to 67 by 2028, 68 by 2037). You can defer claiming — each 9 weeks of deferral adds 1% (5.8% annualised). For a pensioner deferring 3 years from age 66 to 69, state pension rises ~17%. The catch: if you die early, you forfeit the deferred amount. Break-even is typically ~17 years post-retirement (age 83 for someone deferring to 66). Deferral tends to favour people with good health/family longevity and no immediate need for the cashflow.