09/09/2026
It feels like a lot of my clients are accessing their pension pots these days (a combination of the age profile of my clients and the change in tax rules for pension savings, perhaps?), so I thought a reminder about how the drawdowns might be taxed is in order…
When you first take a pension drawdown, the pension company will pay tax to HMRC, often at an emergency tax rate. After the first withdrawal, HMRC should issue a tax code to the Pension company, so the tax deducted more closely reflects the tax you owe on your pension income (which depends on your other income, state pension, employment income, etc.).
You can put a claim in to recover some or all of the tax taken by HMRC on the initial drawdown if it's not going to be a regular event and you believe you will not owe that much tax at the end of the tax year; for example, perhaps you have ceased work, and you’ve been taxed on the pension drawdown as a higher rate taxpayer but will only be a basic rate taxpayer this year.
The HMRC forms you can use in the year (and/or if you don’t file an annual self-assessment tax return):
Form P55 – You’ve flexibly accessed part of your pension and are not planning regular withdrawals.
Form P53 – Small pension lump sum (usually under £10,000 while still working/receiving other income).
Form P53Z – You have emptied your entire pension pot but are still working/receiving other income.
Form P50 – You’ve stopped working, taken a pension lump sum and don’t expect further income in the year.
When you fill the forms in, you’ll need to provide income estimates for the tax year for all sources of income – Employment, Dividends, Interest, other pensions, Property Rental, etc. Don’t assume that HMRC will fill in the blanks; you need to put everything on the form.
And remember, usually 25% of your pension drawdown is tax-free cash, and only the other 75% has had tax deducted, so make sure you know what figures you need to put on the reclaim form.
