Tax on £60,000 a Year from a £300,000 Pension Pot
From a £300,000 pot you can usually take £75,000 (25%) tax-free. Drawing £60,000 a year from the rest costs £11,432 in Income Tax in 2026-27, leaving £48,568 a year, or £4,047 a month.
| Pension pot | £300,000 |
| Tax-free lump sum (25%) | £75,000 |
| Remaining pot for drawdown | £225,000 |
| Annual drawdown (taxable) | £60,000 |
| Income Tax on the drawdown | £11,432 |
| Net income per year | £48,568 |
| Net income per month | £4,047 |
| Effective tax rate | 19.1% |
| Full years the remaining pot lasts (no growth) | 3 |
How this is worked out
You can usually take up to 25% of a pension as a tax-free lump sum, capped at £268,275. Here the lump sum is £75,000, taken once at the start. Every pound drawn from the remaining £225,000 is taxed as income.
The £60,000 drawdown uses the 2026-27 Income Tax bands for England, Wales and Northern Ireland, with a Personal Allowance of £12,570. National Insurance is paid on earnings from work, not on pension income, so none is deducted.
Assumptions: the drawdown is your only taxable income, there is no investment growth, and your provider applies the right tax code. A large withdrawal taxed on an emergency code can be over-taxed and reclaimed later.
Sources: Tax when you get a pension: what is tax-free (GOV.UK), Tax when you get a pension (GOV.UK), Income Tax rates and allowances (GOV.UK), National Insurance: who pays (GOV.UK)