Tax on pension withdrawals in the UK
How tax-free cash, PAYE, emergency tax and Scottish Income Tax can affect UK defined contribution pension withdrawals.
Last reviewed 4 September 2026
Frequently asked questions
Are pension withdrawals capital gains?
No. Taxable pension withdrawals are generally subject to Income Tax, not Capital Gains Tax.
Why was too much tax deducted?
The provider may have applied an emergency tax code to the first flexible payment. HMRC provides in-year reclaim routes for eligible cases.
Do Scottish pensioners pay different tax?
Scottish taxpayers pay Scottish Income Tax rates and bands on pension income, while tax-free lump sum pension rules are UK-wide.