How UK drawdown income is taxed
When taking withdrawals from a UK flexi-access drawdown pension, 25% can be taken completely tax-free upfront (subject to the £268,275 LSA limit).
The remaining 75% is treated as taxable non-savings income. It is added to your state pension, employment earnings, or rental profits, and taxed at your marginal rates (20%, 40%, 45% in England/Wales, or Scottish bands).
Worked example: Tax on £30,000 drawdown withdrawal
Taking £30,000 with 25% tax-free cash delivers £7,500 tax-free. The remaining £22,500 is taxable. For an individual already earning £20,000 salary, the £22,500 is taxed at 20% (£4,500 tax), yielding £25,500 net cash in hand (15% overall effective tax rate).
Inputs for the uk pension drawdown tax calculator
Withdrawal & Income
Enter the gross withdrawal and other taxable income in the same tax year.
Tax Jurisdiction
Select England/Wales or Scottish tax rates.
CALCULATOR QUESTIONS
UK pension drawdown tax calculator questions
Does pension drawdown income push me into higher rate tax?
Yes, large lump sums are added to other income in that single tax year and can push your earnings over the £50,270 higher rate threshold.