Small Pots Lump Sum Calculator
Cash in a pension pot of £10,000 or less – see your tax and net amount (2026/27)
Last updated: June 2026
Small Pots Lump Sum Calculator (2026/27)
Work out the tax and net amount when you cash in a small pension pot of £10,000 or less as a small pot lump sum. Enter your figures below.
What is the small pots lump sum rule?
The small pots lump sum rule lets you cash in a defined-contribution pension pot worth £10,000 or less in one go, regardless of the total value of your other pensions. It is a useful way to tidy up tiny, forgotten or stranded pots without the usual pension complications. As with trivial commutation, 25% of each small pot is paid tax-free and the remaining 75% is taxable as pension income. This calculator is for anyone aged 55 or over (rising to 57 from 6 April 2028) who has one or more small pension pots and wants to know exactly how much tax they will pay and what lands in their bank account.
The big advantage of taking a small pot lump sum rather than a standard flexible drawdown is that it does not trigger the Money Purchase Annual Allowance (MPAA), so you keep the full £60,000 annual allowance for future contributions, and it does not use up any of your £268,275 lump sum allowance (LSA). That makes small pots particularly attractive if you are still working and paying into a pension.
How the calculator works
For each qualifying pot the calculator splits the value into a 25% tax-free element and a 75% taxable element. Your pension provider deducts basic-rate tax of 20% on the taxable element before paying you. The calculator then works out your true tax by adding the taxable 75% on top of your other income for the year and applying the correct 2026/27 marginal rates (20% basic, 40% higher, 45% additional, with the personal allowance taper above £100,000). Comparing the two tells you whether HMRC owes you a refund or you still owe a little more.
- Eligibility check: warns if a pot exceeds £10,000 or if you exceed the three-pot limit for personal pensions.
- Tax position: shows the 20% deducted at source versus your real liability.
- Allowance badges: confirms the MPAA is not triggered and the LSA is not used.
Worked example
Suppose you have a single personal pension pot worth £9,000 and other taxable income of £30,000 (a basic-rate taxpayer).
- Tax-free 25%: £9,000 × 0.25 = £2,250.00
- Taxable 75%: £9,000 × 0.75 = £6,750.00
- Provider deducts 20%: £6,750 × 0.20 = £1,350.00
- True tax (still within the basic-rate band): £6,750 × 20% = £1,350.00
- Net in your pocket: £9,000 − £1,350 = £7,650.00
Here the 20% deducted exactly matches the true tax, so there is no refund or extra bill. A non-taxpayer or someone pushed into a higher band would see a different result – which is exactly what the calculator flags.
Frequently asked questions
How many small pots can I take?
You can take up to three small pot lump sums from personal or other non-occupational pensions in your lifetime. There is no limit on the number of small pots you can take from separate occupational (workplace) pension schemes, provided each pot is £10,000 or less.
Does taking a small pot trigger the MPAA?
No. Taking a small pot lump sum does not trigger the Money Purchase Annual Allowance. You keep your full £60,000 annual allowance, unlike flexible drawdown which would cut it to £10,000.
Why did my provider deduct 20% tax?
Providers apply basic-rate (20%) tax to the taxable 75% of a small pot at source. If your marginal rate is lower (you are a non-taxpayer) you can reclaim the overpayment from HMRC using form P55 or P53Z. If you are a higher or additional-rate taxpayer you may owe more through Self Assessment.
Does a small pot use my lump sum allowance?
No. Small pot lump sums are not relevant benefit crystallisation events, so they do not use up any of your £268,275 lump sum allowance or the £1,073,100 lump sum and death benefit allowance.
Source: HMRC Pensions Tax Manual PTM063700 – small pension payments and gov.uk Income Tax rates and allowances 2026/27.