Pension Drawdown Calculator 2026/27
Flexi-access drawdown lets you keep your pension pot invested while taking money out as and when you need it, rather than being forced to buy an annuity. When you first access a pot, you can normally take up to 25% of it as a tax-free lump sum — officially the Pension Commencement Lump Sum (PCLS) — subject to an overall cap of £268,275 across all your pensions combined for 2026/27, known as the Lump Sum Allowance.
Everything you withdraw beyond that tax-free portion is taxed as income in the tax year you take it, added on top of any other income you have — salary, state pension, rental income, and so on — and taxed at your normal Income Tax rates: 20% Basic Rate, 40% Higher Rate above £50,270, and 45% Additional Rate above £125,140. This is a crucial planning point: taking a large lump sum in one tax year can push a big chunk of it into a higher tax band, whereas spreading the same withdrawal across two or three tax years can sometimes keep more of it at the Basic Rate.
Your pension provider will usually apply an emergency tax code to your first flexible withdrawal, which can overtax you significantly in that first month — many people are able to reclaim this overpayment from HMRC using forms P55, P53Z or P50Z depending on their exact circumstances, rather than waiting for the automatic year-end reconciliation.
Taking your 25% tax-free cash on its own doesn't restrict your future pension saving. But as soon as you take any taxable income from flexi-access drawdown — even £1 — you trigger the Money Purchase Annual Allowance (MPAA), which cuts the amount you can pay into defined contribution pensions with tax relief from the standard £60,000 a year down to just £10,000 a year. Unlike the standard annual allowance, the MPAA can't be topped up using carry forward from previous years.
This matters most for anyone who might want to keep working and contributing to a pension after starting to draw an income from another pot — a common scenario for people phasing into retirement gradually, or those who access a smaller pot early while still earning from employment. If that's your situation, it's worth exploring whether an Uncrystallised Funds Pension Lump Sum (UFPLS) or careful sequencing of withdrawals could avoid triggering the MPAA prematurely.
The Normal Minimum Pension Age is currently 55, and is confirmed to rise to 57 from 6 April 2028 — so anyone planning to access their pension between ages 55 and 57 in the next couple of years should check exactly how this transition affects their specific plan, as some schemes have protected lower ages for certain members.
It's also worth remembering that any money left in a drawdown pot when you die can usually be passed on to your beneficiaries, and — depending on your age at death and current rules — may be passed on free of Income Tax if you die before age 75, or taxed as the beneficiary's income if you die at 75 or older. Pension death benefit rules have been under review as part of wider changes to Inheritance Tax treatment of pensions, so it's sensible to check the current position directly with your provider or adviser rather than relying on older guidance.
Because drawdown decisions are often irreversible and interact with tax, means-tested benefits, and long-term financial security, the free and impartial Pension Wise service (run by MoneyHelper, for anyone 50 or over with a defined contribution pension) is worth using before making any significant withdrawal — this calculator is for quick planning estimates, not a substitute for that guidance.
Consider someone with a £300,000 pension pot, no other income yet, who wants £30,000 of spending money this year. Their maximum tax-free cash is £75,000 (25% of £300,000, comfortably under the £268,275 cap). If they take just enough tax-free cash to cover the £30,000 — no taxable withdrawal needed — they pay no Income Tax at all this year, because the whole amount comes from their tax-free allowance.
Now compare someone in the same position but who has already used up their tax-free cash entirely in a previous year, and needs to take the same £30,000 as a fully taxable withdrawal with no other income. Using 2026/27 bands, the first £12,570 is covered by their Personal Allowance and is tax-free, the next £17,430 falls in the Basic Rate band and is taxed at 20% (£3,486) — a total tax bill of roughly £3,486 on the same £30,000 withdrawal, purely because of how much tax-free cash was available versus already used.
This illustrates why the order and pacing of withdrawals matters so much in drawdown planning. Someone with other income already using up their Personal Allowance and Basic Rate band — perhaps from continued part-time work or a defined benefit pension — will find that every pound of taxable drawdown withdrawal is taxed at their marginal rate from the first pound, with no fresh allowance to soak some of it up tax-free. Running the numbers before withdrawing, rather than after, is the difference between a withdrawal that's nearly tax-free and one that loses a meaningful chunk to Income Tax unnecessarily.