Tax Refund Calculator

Pension lump sum tax calculator

Take money out of a pension for the first time and your provider almost always over-deducts. They have no tax code for you, so HMRC's emergency rules make them tax the payment as though you were going to take the same amount every month for a year. On a large withdrawal that can mean thousands of pounds too much. This works out how much.

Your withdrawal

Four questions. Every one of them changes the figure.

Fill in your figures, then press Calculate tax.

Why you get overtaxed

An emergency code is applied on a "Month 1" basis, which means it is non-cumulative: it looks at this single payment in isolation and assumes eleven more just like it are coming.

  • You get one twelfth of your personal allowance against the payment, about £1,047 rather than £12,570.
  • You get one twelfth of each tax band too, so a withdrawal runs into the 40% and 45% rates almost immediately.
  • It ignores your actual income, including the fact that this may be the only taxable money you receive all year.

A £75,000 taxable withdrawal for someone with no other income attracts over £32,000 of emergency tax, when barely £17,000 is genuinely due.

The 25% that isn't taxed

Normally a quarter of what you take is tax-free, and only the rest counts as income. The calculator assumes that is the case unless you say otherwise, because most people taking a first lump sum have their tax-free entitlement intact.

Untick the box if you have already taken your tax-free cash, or if this withdrawal is coming entirely from a pot you have already crystallised. The whole amount is then taxable, and the emergency deduction is correspondingly larger.

Getting the money back

There are two ways, and the difference is only how long you wait.

  • Do nothing. HMRC reconciles your record after the tax year ends and repays the difference automatically. It is reliable, but you might wait months.
  • Claim now using the right form, and HMRC aims to repay within about 30 days. The calculator names the one that fits your answers.

Which form depends on what you have taken and what else you earn:

  • Form P55 if you have taken only part of your pot and are not taking regular payments from it.
  • Form P53Z if you have emptied the pot and still have other taxable income.
  • Form P50Z if you have emptied the pot and have no other taxable income.

You have four years. A repayment claim must reach HMRC within four years of the end of the tax year it relates to.

What this estimate leaves out

  • It assumes you have lump sum allowance remaining. The 25% tax-free entitlement is capped across your lifetime, currently at £268,275, and this does not track what you have already used.
  • It covers income tax only. Pension withdrawals do not attract National Insurance, but they can affect means-tested benefits and how much you can still pay into a pension.
  • It assumes a defined contribution pension taken flexibly. Final salary schemes and small-pot lump sums work differently.
  • It uses the figures you enter for the whole year. Income arriving later will change what is finally due.

This is an estimate, not tax advice, and taking money from a pension is rarely only a tax question. See the terms page for the full disclaimer.

Other calculators

Paying into a pension rather than taking money out? The pension tax relief calculator covers higher-rate relief on contributions. Overpaid tax through PAYE? Use the main tax refund calculator. Working under CIS? Use the CIS tax rebate calculator. Married with one of you earning under the personal allowance? Try the Marriage Allowance calculator.