Answers · UK 2025/26
How much pension can I take tax-free as a lump sum?
You can take 25% of each pension pot tax-free from age 55 (rising to 57 from April 2028), up to a lifetime cap of £268,275 — the Lump Sum Allowance (LSA), which replaced the old Lifetime Allowance in April 2024.
Full answer
Under the rules from 6 April 2024, you can take 25% of each defined-contribution pension pot as a tax-free lump sum, subject to the £268,275 Lump Sum Allowance (LSA) — the equivalent of 25% of the old £1,073,100 Lifetime Allowance. Beyond the LSA, lump sums become taxable as Income Tax. The Lump Sum and Death Benefit Allowance (LSDBA) of £1,073,100 covers tax-free death benefit payments to beneficiaries plus all lifetime tax-free cash. Options for taking tax-free cash: take the full 25% in one go and put the rest into drawdown or annuity; take it in instalments via UFPLS (Uncrystallised Funds Pension Lump Sum, where 25% of each withdrawal is tax-free and 75% is taxed); or "flexi-access drawdown" allowing flexible withdrawals from the 75% taxable portion. Taking any taxable cash triggers the Money Purchase Annual Allowance (MPAA), cutting future contributions tax-relief to £10,000/year. Defined-benefit pensions have separate tax-free cash rules — usually 25% of the pension's "commutable" value, calculated using scheme-specific factors.
Try the calculator
More answers
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.