See how much emergency Month-1 tax is withheld from your first pension withdrawal, your real tax due — and which form (P55, P53Z, P50Z) gets the refund.
By Konstantin Iakovlev · Founder, Calks.uk
Last updated: · Verified against HMRC and GOV.UK 2026/27 rates
Rates verified: 6 July 2026
Quick Answer
The first flexible withdrawal from a pension is usually taxed on an emergency Month-1 code: only 1/12 of your Personal Allowance and tax bands apply, so a £20,000 first withdrawal (with 25% tax-free) has roughly £4,000 withheld even if little or no tax is actually due. Reclaim in ~30 days with form P55 (partial withdrawal), P53Z (pot emptied, other income) or P50Z (pot emptied, no other income) — or wait for HMRC's automatic P800 after the tax year.
State Pension, other pensions, earnings, rental income
Emergency Tax Withheld (Month-1 code)
£5,181.25
You receive £14,818.75 of your £20,000.00 withdrawal (£5,000.00 tax-free)
Tax Actually Due
£2,886.00
Your Refund
£2,295.25
How to reclaim: form P55
P55 — you took part of the pot and are not taking regular payments. File online via your Personal Tax Account; HMRC refunds in around 30 days. If you do nothing, HMRC reconciles automatically after the tax year ends (P800 letter) — you get the money either way, just later.
Taking a second withdrawal in the same tax year usually moves you onto a cumulative code, which self-corrects the overpayment through that payment instead.
Disclaimer
This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.
How It Works
When you take your first flexible payment from a defined-contribution pension (drawdown or UFPLS), your provider almost never holds your correct tax code — so HMRC rules require the emergency code (1257L) on a Month 1 basis. Month 1 means the payment is taxed as if it were one month of a regular salary: you get 1/12 of the Personal Allowance (£1,047.50) at 0%, 1/12 of the basic-rate band at 20%, 1/12 of the higher-rate band at 40%, and anything beyond at 45%. A large one-off withdrawal therefore has far more tax withheld than you actually owe for the year.
Since the system began in 2015, over £1.37 billion has been repaid to people over-taxed on pension withdrawals. From April 2025 HMRC automatically moves people who keep withdrawing onto a cumulative code much faster, which fixes repeat withdrawals — but the very first payment of a new drawdown arrangement is still typically over-taxed under Month 1.
This calculator shows three numbers: the emergency tax your provider will withhold, the tax genuinely due on the withdrawal given your other income for the year (the taxable part simply stacks on top of your other income through the normal annual bands — Scottish bands if you are a Scottish taxpayer), and the refund you can reclaim.
To get the money back without waiting, use the right HMRC form: P55 if you withdrew part of the pot and are not taking regular payments; P53Z if you emptied the pot and have other taxable income; P50Z if you emptied the pot and have no other income this tax year. File through your Personal Tax Account — refunds typically arrive within 30 days. Do nothing and HMRC still reconciles automatically after 5 April via a P800 letter.
Planning tip: taking a small first withdrawal (say £100) triggers the emergency code on a trivial amount; by the second, larger withdrawal HMRC has usually issued a cumulative code and the correct tax comes out in real time. Remember that only 75% of an UFPLS payment is taxable — the 25% tax-free part never enters the calculation.
Example: £20,000 first withdrawal (25% tax-free), £12,000 other income
- Tax-free part: 25% × £20,000 = £5,000 → taxable part £15,000
- Month-1 code: £1,047.50 at 0%, £3,141.67 at 20% (£628), £6,239.17 at 40% (£2,496), £4,571.66 at 45% (£2,057) → ~£5,181 withheld
- Actually due: £12,000 other income uses most of the Personal Allowance; £15,000 stacks at 20% (basic band) → ~£2,886
- Overpaid: ~£2,295 → reclaim with P55 (pot not emptied)
- Refund lands in around 30 days via your Personal Tax Account
Frequently Asked Questions
- Why was so much tax taken from my pension withdrawal?
- Your provider applied the emergency tax code (1257L) on a Month-1 basis, which HMRC requires for the first flexible withdrawal when your correct code isn't held. Month 1 treats the single payment as one month of an ongoing salary: only 1/12 of the Personal Allowance (£1,047.50) is tax-free, the next £3,141.67 is taxed at 20%, the next £6,239.17 at 40%, and everything above at 45%. On a £15,000 taxable withdrawal that means over £5,000 withheld even though most people owe a fraction of that for the year. It is a cash-flow problem, not a permanent loss — the overpayment is fully reclaimable. Source: HMRC.
- Which form do I use to reclaim emergency pension tax — P55, P53Z or P50Z?
- It depends on two things: whether the withdrawal emptied your pot, and whether you have other taxable income this tax year. P55 — you withdrew part of your pot and aren't taking regular payments from it. P53Z — you emptied the whole pot and have other taxable income (a job, State Pension, another pension). P50Z — you emptied the whole pot and have no other taxable income this year. All three are filed free through your Personal Tax Account on GOV.UK and HMRC aims to refund within 30 days. If you skip the form, the money still comes back via the automatic P800 reconciliation after the tax year ends on 5 April. Source: GOV.UK.
- Did the April 2025 HMRC change fix emergency tax on pensions?
- Partly. From April 2025 HMRC automatically replaces temporary codes with cumulative codes much faster for people newly receiving pension income, so those making regular or repeat withdrawals now see the overpayment self-correct within a payment or two instead of waiting until year end. However, the very first flexible payment from a new arrangement is still normally taxed on the emergency Month-1 basis, because the provider has no code for you when it runs payroll. Since pension freedoms began in 2015, over £1.37 billion has been repaid across more than 470,000 reclaim forms. The practical workaround remains: take a token first withdrawal (e.g. £100) to trigger a proper code, then take the real amount. Source: HMRC, industry analysis.
- Do Scottish tax rates apply to my pension withdrawal?
- Yes, if you are a Scottish taxpayer (your main home is in Scotland — your code has an S prefix). The taxable part of a pension withdrawal is non-savings income, so it is taxed at the Scottish rates and bands: 19% starter, 20% basic, 21% intermediate, 42% higher, 45% advanced and 48% top rate for 2026/27. The 25% tax-free lump sum entitlement and the reclaim forms are identical UK-wide; only the rate bands applied to the taxable 75% differ. The emergency Month-1 mechanics also work the same way, using 1/12 slices of the Scottish bands. Source: HMRC, Revenue Scotland guidance.