The pension drawdown tax rules
You won't pay tax on any of that 25% regardless of whether you are: Taking cash in chunks. Taking your entire pot. Getting a guaranteed income (a pension annuity)
Do I pay tax on my drawdown pension?
You can usually have up to 25% of your pension paid to you tax free. If you move your entire pension into drawdown, you'll receive all your tax-free cash in one lump sum payment.
How can I avoid paying tax on my pension drawdown?
The way to avoid paying too much tax on your pension income is to aim to take only the amount you need in each tax year. Put simply, the lower you can keep your income, the less tax you will pay. Of course, you should take as much income as you need to live comfortably.
