Pension Lump Sum Calculator — How Much Tax-Free Cash?
Calculate your 25% tax-free pension lump sum and plan how to take it. Understand small pots rules and UFPLS options for UK pension holders.
Every UK pension holder can take 25% of their defined contribution pension pot as a tax-free lump sum from age 55 (increasing to 57 in 2028). The maximum tax-free lump sum across all pensions is £268275 (25% of the £1073100 old lifetime allowance). You can take the full 25% upfront or gradually through uncrystallised funds pension lump sums (UFPLS) where 25% of each withdrawal is tax-free.
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NPS / Pension Calculator
Key Information
| Parameter | Details |
|---|---|
| Tax-Free Portion | 25% of pension pot |
| Maximum Tax-Free | £268275 (2026) |
| Small Pots Rule | Up to £10000 per pot (3 pots maximum) |
| Remaining 75% | Taxed as income when withdrawn |
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Use Calculator NowFrequently Asked Questions
How much is my 25% tax-free lump sum?
For a £200000 pension pot: 25% = £50000 completely tax-free. The remaining £150000 can be taken as taxable income through drawdown or annuity. For a £400000 pot: £100000 tax-free. For pots over £1073100 the tax-free amount is capped at £268275 — any excess above this is taxable when withdrawn.
Should I take the full 25% lump sum at once?
Taking the full 25% immediately is not always optimal. If you do not need the cash it continues growing tax-free inside your pension. However common reasons to take the lump sum include: paying off your mortgage (eliminating monthly payments reduces retirement income needs) investing in an ISA for tax-free growth outside the pension or covering major expenses like home renovations.
What are small pots rules?
The small pots rule allows you to withdraw up to 3 pension pots of £10000 or less as a lump sum. 25% is tax-free and 75% is taxed at your marginal rate. This applies even if you have already taken benefits from other pensions. It is a useful way to consolidate small pension pots from previous employers and simplify your retirement finances.
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Last updated: March 2026