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5 Of The Best Pension Lump Sum Tax Calculators

    Pension Lump Sum Tax Calculator

    If you’re planning on taking a lump sum from your pension, it is important to understand the tax implications of doing so, especially if you’re accessing your pension at 55 and still working, as a higher rate taxpayer you could end up paying 40% tax on any lump sum you withdraw from your pension pot. Here are 5 of the best Pension Lump Sum Tax Calculators we’ve found to help you with your planning:

    Remember, these calculators provide a guide and should not replace professional advice. Professional advice will often save you money in the long run, always talk to a Financial Adviser and/or your accountant first.

    1) Canada Life

    The simplest calculator that shows you how much tax you might pay on any pension withdrawals after you’ve taken your tax-free cash.

    Canada Life Pension Lump Sum Tax Calculator

    2) Hargreaves Lansdown

    This calculator provides you with an indication of the tax you may have to pay based on current rates and allowances. It takes into account personal tax allowances. It also gives the option to work out Scottish income tax levels.


    3) Aviva

    The Aviva Pension Withdrawal Tax Calculator is the most comprehensive of the 5 we tested, as it lets you choose how to take your tax-free cash on lump sum withdrawals from your pension pot. You can opt to take all of your tax-free cash first, take 25% of each withdrawal as tax-free cash or specify the amount of tax-free cash you would like to take.

    Aviva Pension Lump Sum Tax Calculator

    4) Which?

    Consumer champion Which? have created their own Pension Lump Sum Tax Calculator. This calculator will help you figure out how much income tax you’ll pay on a lump sum after you’ve taken your 25% tax-free cash.


    5) Just Adviser 

    Lets you choose your taxation based on where you live in the UK. You can select to take some or all of your tax-free cash and it will work out the tax due on anything over that. Technically, this is a tool for financial advisers to use, but you can access the website as a consumer.

    Just Financial Pension Lump Sum Tax Calculator

    Tax Planning for Retirement

    It’s important to understand that effective retirement planning could reduce the amount of tax you need to pay, by optimising the way you take your tax-free cash, especially if you’re still working. Remember, you don’t have to take your tax-free cash at 55 and you don’t have to take it all in one lump sum. Find out more about your options here.  

    Read more: Can I take my pension at 55 and still work?

    Personal Allowance and Lump sum withdrawal 

    It’s important to understand that all of these calculators assume the full personal allowance and tax bands are available, but depending on when you take your lump sum, they may not be. 

    For instance, in April, the first month of the tax year, only 1/12th of your personal allowance and tax bands are available so you may pay a disproportionate amount of tax on your withdrawal, which you will need to reclaim from HMRC.

    Tax-Free Cash and Inheritance Tax

    If your estate is over the Inheritance Tax Threshold It’s important to know that once you withdraw your tax-free cash from your pension, it immediately becomes part of your estate and therefore liable for inheritance tax at 40%. Any money – including tax-free cash held within your pension is not usually liable for inheritance tax.

    Looking for more tools to help you plan your retirement? Head over to our Pension Calculator page and find our collection of useful calculators for retirement planning.

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    Simon Garber is an Independent Financial Adviser and Pension Transfer Specialist with over 15 years of experience. He's a member of the Personal Finance Society and holds the coveted Gold Standard for Pension Transfer Advice.

    He is the Managing Director of 2020 Financial Ltd, Financial Advisors specialising in Retirement Planning & Wealth Management, based in Southampton, Hampshire.

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