Pension Taxation Calculator
While the pension freedoms have given us greater control over how we access and spend our pension savings, it's important to be aware of the tax implications involved. After all, only 25% of your total pot is tax free – you will need to pay income tax on anything taken after that, and depending on how much cash you take, this could reduce your pension pot significantly.
Our Pension Taxation Calculator will help you work out how much income tax you would need to pay if you took your whole pot as cash. And you can print out your results afterwards to refer to later on if you wish.
Using the tool
- Start by adding where you live in the UK.
- Then add any annual income that you will receive over the next year – whether that's previous salary payments or future income.
- Then enter the total value of the pension pot.
The tool will then estimate how much tax you are likely to pay on the money that you withdraw from your pension fund as well as any additional tax that you may have to pay on any earned income over the year.
Tax is a pretty complicated subject, so the tool will also break down the total tax that you would have to pay by showing you:
- what your personal tax free allowance is
- how much tax you would have to pay at basic rate
- and how much tax you would have to pay at the higher rate and additional tax rate bands.
Then the tool will estimate how much total cash you will have left after tax if you took the whole pension pot as cash. The tool makes several assumptions which will be affected by what you enter into it, so make sure that you take the time to read the text at the bottom of the tool carefully.
If you are surprised by how much tax you will have to pay if you take your entire pension fund as cash, it might be worth exploring other options as well. To understand the risks involved in investing in an income drawdown, why not explore our Drawdown Risk Calculator?