Answers · UK 2025/26

How much tax do I pay on £30,000 of pension drawdown in 2026/27?

If £30,000 is your only income for 2026/27 and you have already taken your tax-free cash, the £30,000 is taxed like a salary: £12,570 is tax-free under the Personal Allowance and £17,430 is taxed at 20%, giving about £3,486 Income Tax. No National Insurance is due on pension income.

Last updated: 7 June 2026Last reviewed: 7 June 2026How we verify

Full answer

Money you draw from a defined contribution pension through flexi-access drawdown is taxed as income in the year you take it, on top of any other income you receive. A common approach is to take your 25% tax-free lump sum first (up to the Lump Sum Allowance of £268,275), leaving the rest in drawdown to be taxed when withdrawn. If £30,000 of taxable drawdown is your only income for 2026/27, the first £12,570 is covered by the Personal Allowance at 0% and the remaining £17,430 is taxed at the 20% basic rate, giving Income Tax of about £3,486, so you keep roughly £26,514. Crucially, no National Insurance is charged on pension income at any age, which is why drawdown is taxed more lightly than the same amount of salary. If you also receive the State Pension or other income, the drawdown stacks on top and more of it may fall into the 40% higher-rate band above £50,270. The first time you take a flexible drawdown payment, the provider often applies an emergency tax code that overtaxes you, and you reclaim the excess from HMRC using forms P55, P53Z or P50Z, or wait for it to be corrected. Taking large lump sums in a single tax year can needlessly push you into higher-rate tax, so spreading withdrawals across years to use each year's Personal Allowance and basic-rate band is usually more efficient. Taking any taxable drawdown also triggers the Money Purchase Annual Allowance, cutting future pension contributions to £10,000 a year. Use the pension drawdown or income tax calculator to model your withdrawals and tax.