Answers · UK 2025/26
Is my UK pension taxed?
You can take 25% of your pension tax-free (up to £268,275 lifetime LSA). The remaining 75% is taxed as income at your marginal rate when withdrawn. Contributions in get tax relief at your marginal rate. The State Pension is taxable but not subject to NI.
Full answer
UK pensions are «EET» — Exempt going in, Exempt while invested, Taxed coming out. Contributions: tax relief at marginal rate (20%, 40% or 45%). Investment growth: tax-free inside the pension. Withdrawals: 25% tax-free (Lump Sum Allowance £268,275 lifetime), 75% taxed as income at marginal rate. Triggering flexible access reduces your future Annual Allowance to MPAA £10,000. From April 2027, undrawn pension pots become part of your IHT estate (currently exempt) — major estate planning change. The State Pension is taxable income but not subject to NI. If your total income (pensions + other) exceeds the Personal Allowance £12,570, you owe Income Tax on the excess.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.