# How is pension drawdown taxed?

> Quick answer · Last updated 4 July 2026

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## In short

Tax-free cash is 25% of crystallised amounts (within allowances). All other withdrawals are taxed as earned income through PAYE — using personal allowance and basic-rate band first.

Large single withdrawals can push you into higher-rate tax — spreading withdrawals across tax years saves tax.

State Pension uses part of your personal allowance before drawdown income is taxed.

See pension crystallisation and drawdown income guides.

## Related

- [Drawdown income guide](https://moneyguide.org.uk/pensions/pension-drawdown-income-guide/)
- [Take-home pay calculator](https://moneyguide.org.uk/tools/take-home-pay-calculator/)

## Primary source

gov.uk/tax-on-your-private-pension/what-you-can-do-with-your-private-pension-pot

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.