Pension Drawdown Calculator 2026/27: Income, Tax and How Long Your Pot Lasts

Try the pension drawdown calculator

Use the calculator above to model your own numbers. Enter your pot value, the annual income you want to take, an assumed growth rate and any State Pension you expect. It estimates your drawdown income, the Income Tax due in 2026/27 and how many years the pot could keep paying out before it runs dry.

What pension drawdown actually is

Flexi-access drawdown lets you leave your defined contribution pension invested while you take money out of it as and when you need it. Unlike an annuity, you are not handing the pot to an insurer in exchange for a fixed income for life. You stay in control of the investments, the withdrawals and what is left for your beneficiaries, but you also carry the risk that the pot underperforms or runs out.

Most people start by taking their 25% tax-free cash, then move the rest into a drawdown account and draw an income from it. You can turn withdrawals up, down or off entirely. That flexibility is the appeal, and the danger: draw too much in the early years and a market dip can do lasting damage.

Your 25% tax-free cash explained

You can normally take up to 25% of your pension pot tax-free, capped by the Lump Sum Allowance. The rest of the pot stays in the pension and is taxed as income when you withdraw it. You do not have to take all 25% in one go. With drawdown you can phase it: crystallise part of the pot, take a slice of tax-free cash and a slice of taxable income, and leave the rest untouched.

The detailed maths of that one-off lump sum sits on our pension lump sum tax calculator. This page focuses on what happens next: the ongoing taxable income you draw from the remaining 75%.

How drawdown income is taxed in 2026/27

Once you have taken your tax-free cash, every further withdrawal from the pot is treated as taxable income, exactly like a salary or a pension annuity payment. It stacks on top of any other income you have that year, including the State Pension, rental income or part-time earnings.

For England, Wales and Northern Ireland the 2026/27 rules are:

• The first £12,570 of total income is covered by the Personal Allowance and taxed at 0%.
• The next slice up to £37,700 of taxable income is taxed at the 20% basic rate.
• Taxable income between £37,700 and £125,140 is taxed at the 40% higher rate.
• Anything above £125,140 is taxed at the 45% additional rate.

The key point most people miss: your State Pension uses up your Personal Allowance first. If you already get the State Pension, much of your tax-free band may be gone before a single pound of drawdown is paid.

Scotland is different. If you are a Scottish taxpayer, your drawdown income is taxed using Scotland's own bands and rates (starter 19%, basic 20%, intermediate 21%, higher 42%, advanced 45% and top 48%), not the rates above. The Personal Allowance is still the UK-wide £12,570. Our Scotland tax calculator applies the Scottish bands if that is you.

How the pension drawdown calculator works

The calculator runs two linked sums each year: the tax on what you withdraw, and the running balance of your pot.

The income tax formula in plain words is:

Taxable income = State Pension + drawdown withdrawal + any other income

Income Tax = 20% of the slice in the basic band + 40% of the slice in the higher band + 45% of the slice in the additional band, after the Personal Allowance.

The pot projection works like this for each year:

End-of-year pot = (start-of-year pot − withdrawal) × (1 + growth rate)

It repeats that until the pot reaches zero, which tells you roughly how many years your money lasts. Growth and inflation are assumptions, not promises, so treat the "years remaining" figure as a guide and re-run it with a lower growth rate to stress-test it.

Worked example: Margaret, 66, with a £200,000 pot

Margaret has just retired in 2026/27. She takes her 25% tax-free cash of £50,000 up front and moves the remaining £150,000 into flexi-access drawdown. She also receives the full new State Pension, which we will treat as £12,000 for this example, and she wants a total income of around £25,000 a year.

Her State Pension of £12,000 uses up most of her £12,570 Personal Allowance, leaving just £570 of allowance unused. To reach £25,000 of total income she draws £13,000 from her pot.

• Total income: £12,000 + £13,000 = £25,000.
• Personal Allowance: £12,570, so taxable income = £25,000 − £12,570 = £12,430.
• All £12,430 sits in the 20% basic band: tax = £12,430 × 20% = £2,486.
• Net income for the year: £25,000 − £2,486 = £22,514.

Now the pot. If her remaining £150,000 grows at 4% a year and she keeps drawing £13,000:

• Year one: (£150,000 − £13,000) × 1.04 = £142,480.
• Year two: (£142,480 − £13,000) × 1.04 = £134,659.

At 4% growth and £13,000 withdrawals, the pot keeps shrinking slowly and lasts well into her 80s. Drop the growth to 2% and the same withdrawals drain it noticeably faster, which is exactly why you should test more than one growth figure.

Worked example: David takes too much, too soon

David, 60, has a £120,000 pot and no State Pension yet. He takes £30,000 of tax-free cash and decides to draw £40,000 from the remaining £90,000 in his first year to clear a mortgage.

• Taxable income: £40,000. Personal Allowance £12,570 leaves £27,430 taxable.
• That £27,430 all falls in the basic band: tax = £27,430 × 20% = £5,486.

He gets the cash, but he has burned through a huge slice of his pot in one go, and a single large withdrawal can tip part of your income into the 40% band in years when you have other income. Spreading withdrawals across tax years usually keeps more of your money in the 20% band.

2026/27 Income Tax rates that apply to drawdown (England, Wales & NI)

The Personal Allowance is reduced by £1 for every £2 of total income above £100,000, and disappears entirely at £125,140. Scottish taxpayers use different rates and bands. Figures checked for the 2026/27 tax year against gov.uk income tax rates and the rules in gov.uk guidance on tax on your private pension.

How long will my pension last in drawdown?

There is no fixed answer, because it depends on three moving parts: how much you draw, how the investments perform and how long you live. A common rule of thumb is to draw no more than around 3.5% to 4% of the pot a year so that growth has a chance to refill what you take. On a £200,000 pot that is roughly £7,000 to £8,000 a year before tax.

The real risk is "sequence of returns". If markets fall sharply in your first few years of drawdown while you are still withdrawing, the pot can shrink so far that later growth never recovers it. The defence is flexibility: trim your withdrawals in bad years, and avoid selling investments at the bottom to fund a fixed income. Always re-run the calculator with a pessimistic growth rate, not just an optimistic one.

Drawdown vs annuity: which suits you?

Drawdown keeps you invested and in control, with the upside of growth and the ability to pass on what is left. An annuity instead swaps your pot for a guaranteed income for life, removing investment risk and the worry of outliving your money, but you give up flexibility and most of the inheritance value. Many people use a blend: an annuity to cover essential bills and drawdown for everything else. Compare a guaranteed income on our annuity calculator, and model your overall retirement pot with the pension calculator or a SIPP calculator if you manage your own investments.

Things to watch and common mistakes

• Forgetting the State Pension eats your allowance. Once your State Pension starts, it fills your Personal Allowance first, so more of your drawdown is taxed than you expected.
• Emergency tax on your first withdrawal. HMRC often taxes a first drawdown payment on a "month 1" emergency code, taking far too much. You can usually reclaim it using forms P55, P53Z or P50Z, or it corrects itself through your tax code.
• Triggering the Money Purchase Annual Allowance. Taking taxable drawdown income (beyond the tax-free cash) cuts how much you can still pay into pensions with tax relief. If you plan to keep contributing, get advice first.
• Drawing a big lump in one tax year. A single large withdrawal can push part of your income into the 40% higher rate. Spreading it across two tax years often keeps you in the 20% band.
• Assuming Scottish and rest-of-UK tax is the same. It is not. Scottish taxpayers have extra bands and higher rates above the basic band.
• Ignoring inflation. A fixed £15,000 a year buys less every year. Build in rising withdrawals or accept a falling real income.

What to do next

Run your own pot through the pension drawdown calculator using at least two growth rates, then check the tax with the headline 2026/27 bands above. If your income is close to a band edge, model spreading withdrawals across tax years. For the official rules on tax-free cash and taxable income, read MoneyHelper's guide to income drawdown.

These figures are estimates for general guidance only and are not personal tax or financial advice. Pension decisions are hard to reverse, so consider regulated advice before acting.

Who should use this calculator

This models the decumulation phase: you have a pot, you are drawing an income from it, and the question is how long it lasts. That is a harder problem than building the pot, because you are withdrawing from a balance that is also moving with markets.

The withdrawal rate is the lever that matters most. The often-quoted 4% rule is a rough guide from a different market and era, not a guarantee — and the risk that dominates is sequence of returns. Poor returns in the first few years of drawdown do disproportionate damage, because you are selling units at low prices to fund income and those units never recover.

What this calculator assumes

• The pot grows at the rate entered while withdrawals are taken.
• Withdrawals are annual and rise each year by the increase percentage set, to maintain purchasing power.
• Growth is steady, which is the projection’s biggest simplification — real returns are not.
• The pot is depleted when withdrawals plus growth no longer sustain it.

Limitations — what it does not cover

• Sequence-of-returns risk, which a constant growth rate cannot represent and which is the main reason real drawdown plans fail.
• Tax on withdrawals. Beyond the 25% tax-free element, drawdown income is taxable as earnings.
• The Money Purchase Annual Allowance, which sharply restricts future contributions once you flexibly access a pension.
• Emergency tax on the first withdrawal, commonly applied on a month-1 basis and reclaimable.
• The State Pension starting partway through, which changes how much you need to draw.
• Longevity and care costs, and annuity alternatives that remove the risk of running out.