Tax-Free Lump Sum Calculator 2026/27
When you access your pension, you can usually take up to 25% as a tax-free lump sum, known as the Pension Commencement Lump Sum (PCLS). In 2026/27 this is capped at £268,275 by the Lump Sum Allowance (LSA), which replaced the old Lifetime Allowance. The remaining 75% of your pot is taxable when withdrawn. This calculator shows your tax-free entitlement, how much of the LSA you will use, and the taxable amount remaining. Important: if you have taken any tax-free cash from any pension previously, that reduces the allowance available to you now.
The Lump Sum Allowance explained
The Lifetime Allowance was abolished on 6 April 2024. In its place, HMRC introduced two new allowances that limit how much you can receive tax-free from pensions. The Lump Sum Allowance (LSA) of £268,275 is the total tax-free cash you can receive across all your pensions in your lifetime. The Lump Sum and Death Benefit Allowance (LSDBA) of £1,073,100 covers lump sums paid on death.
Who is most affected by the LSA cap?
The cap only bites if 25% of your total pension wealth exceeds £268,275 -- meaning a total pot of more than £1,073,100. If your combined pension pots are below this level, the LSA cap will not reduce your tax-free cash entitlement. For most people, the full 25% of their pot will be available tax-free.
| Allowance | 2026/27 limit |
|---|---|
| Lump Sum Allowance (LSA) | £268,275 |
| Lump Sum and Death Benefit Allowance (LSDBA) | £1,073,100 |
| Tax-free cash (standard) | 25% of pot, capped at LSA |
| Minimum pension access age (currently) | 55 (rising to 57 in April 2028) |
Frequently asked questions
Most people can take 25% of their pension pot as a tax-free lump sum, up to a maximum of £268,275 in 2026/27. This is known as the Pension Commencement Lump Sum and is capped by the Lump Sum Allowance. If you have a larger pot, amounts above the cap are taxed as income when taken as a lump sum.
The Lifetime Allowance was abolished on 6 April 2024 and replaced by two new allowances: the Lump Sum Allowance of £268,275 and the Lump Sum and Death Benefit Allowance of £1,073,100. The LSA caps the total amount of tax-free cash you can take across all your pension pots in your lifetime. Once you have used up your LSA, any further lump sums from pensions are taxed as income.
No. You can take your tax-free cash in stages. Each time you access a portion of your pension, 25% of that withdrawal is tax-free and 75% is taxable income, until your Lump Sum Allowance is used up. Taking it gradually can be more tax-efficient than a single large withdrawal.
The remaining 75% of your pension pot is subject to income tax when you withdraw it. It is added to your other income in the year of withdrawal and taxed at your marginal rate. Spreading withdrawals over several years can reduce your tax liability by keeping income below higher rate thresholds.
No. Taking a tax-free lump sum from a private or workplace pension has no effect on your state pension entitlement. Your state pension is based solely on your National Insurance record. However, the taxable portion of pension income you draw can affect means-tested benefits and Pension Credit eligibility.
Disclaimer: This calculator provides estimates for guidance purposes only. It does not constitute financial advice. Tax rules are complex and subject to change. Always consult a regulated financial adviser before making pension decisions.