Tax and retirement

Tax-free lump sum

You can take up to a quarter of your pension pot as a tax-free lump sum any time on or after your 55th birthday. You can do this whether you retire or not.

Taxable lump sum

You can take more than your tax-free lump sum , but any extra is taxable. It’s added to any other taxable income you receive. This may push you into a higher tax bracket.

Taxable income

Many of us use the rest of our pension pot to provide an income. HMRC will issue a tax code that tells your pension provider how much tax to deduct from each payment.

Emergency tax codes

Sometimes a tax code isn’t issued in time and your provider has to use an emergency tax code. This means you’ll probably pay more tax than you should. Whilst your tax position should correct itself during, or at the end of, the tax year you can claim a tax refund from HMRC at any time if you think you've paid too much tax.

Claim tax refund