Tax on a £200,000 pension withdrawal — plan across multiple tax years.
How much tax will you pay on a £200,000 pension withdrawal? See the full band breakdown and understand the case for phased drawdown.
A £200,000 pension withdrawal in a single tax year will generate a substantial tax bill. With UFPLS treatment, £50,000 is tax-free and £150,000 is taxable. Combined with state pension, your total taxable income exceeds £162,000 — you will lose your entire personal allowance and pay 40% on a large chunk of income. The tax bill on this withdrawal alone could exceed £50,000. Taking the same amount as £50,000 per year over four years could save you £15,000-£20,000 in total tax. At this scale, you should also consider the interaction with other aspects of your finances: the MPAA restriction on future pension contributions, the impact on means-tested benefits, and potential inheritance tax planning if the funds would otherwise remain in your pension (which is normally outside your estate). An FCA-regulated adviser can model your specific circumstances.