Glossary · UK
What is Uncrystallised Funds Pension Lump Sum (UFPLS)?
A lump sum taken straight from an uncrystallised pension pot where 25% is tax-free and 75% is taxable.
Full Definition
An Uncrystallised Funds Pension Lump Sum (UFPLS) lets you take money directly from a defined contribution pension that has not yet been put into drawdown. Each UFPLS withdrawal is normally 25% tax-free and 75% taxable at your marginal income tax rate, so you take tax-free cash in stages rather than all at once. It can be a simple alternative to flexi-access drawdown for ad hoc withdrawals. Taking a UFPLS triggers the Money Purchase Annual Allowance of GBP 10,000 for 2026/27, limiting future tax-relieved money purchase contributions. Large single withdrawals can be taxed using an emergency code, requiring a later reclaim from HMRC. This is not advice; model withdrawals with the pension calculator and check gov.uk.
How Uncrystallised Funds Pension Lump Sum (UFPLS) is calculated
tax_free = 0.25 x ufpls; taxable = 0.75 x ufpls- ufpls
- gross lump sum taken from the uncrystallised pot
Worked example: A GBP 20,000 UFPLS gives GBP 5,000 tax-free and GBP 15,000 taxable as income.