🇬🇧 United Kingdom drawdown calculator
How should I draw from my SIPP, ISA, and GIA in retirement?
The UK's mix of pension accounts (25% tax-free), fully tax-free ISAs, and capital-gains-taxed general investment accounts makes withdrawal order unusually impactful. This calculator sequences your SIPP, ISA, GIA, and State Pension to minimise lifetime tax.
Account types we model
How we calculate this
- Pension drawdown (SIPP): first 25% of any withdrawal is tax-free. The remaining 75% is added to your income.
- Income tax 2024-25 bands (England): personal allowance £12,570, then basic rate 20% to £50,270, higher rate 40% to £125,140, additional rate 45% above.
- Capital gains tax (October 2024 rates): 18% basic / 24% higher rate. £3,000 annual exempt amount per person.
- ISA / LISA: completely tax-free. The £20,000 annual contribution cap isn't modeled — calculator assumes an existing balance.
- State Pension: around £11,500/year full rate in 2024; taxed as ordinary income.
- Scottish income tax bands (different from England) not yet modeled.
Frequently asked
Should I take the 25% tax-free SIPP lump sum all at once?
Often no. 'Drip-feeding' your 25% by taking small amounts each year (known as UFPLS) can keep you in lower tax bands across the other 75% that's taxed as income. Taking it all at once may push the rest into higher bands. The calculator approximates this by treating each year's withdrawal as 25% tax-free / 75% taxable.
Are ISAs really tax-free forever?
Yes — within the ISA wrapper, there's no tax on dividends, interest, or capital gains. On death, the tax wrapper transfers to a spouse as an 'Additional Permitted Subscription'. For non-spouse heirs, the value enters the estate for inheritance tax purposes, but the investments don't trigger CGT. This makes ISAs exceptionally valuable in estate planning.
What about the Money Purchase Annual Allowance (MPAA)?
Once you flex any SIPP income beyond the 25% tax-free portion, your annual SIPP contribution limit drops from £60,000 to £10,000 (the MPAA). If you still earn income and contribute to a pension, consider the order carefully. The calculator assumes you've already retired and aren't contributing.
Is there a UK equivalent of the US RMD?
No. UK pensions have no mandatory drawdown age. The State Pension pays automatically from age 67 (rising to 68). You can defer SIPP drawdowns indefinitely — useful for inheritance planning since pension assets pass outside your estate for IHT.
Quick glossary
Plain-language definitions for the acronyms used above. Tap any term to expand.
SIPP (Self-Invested Personal Pension)
A pension pot you control. Contributions get tax relief at your marginal rate. The first 25% of any withdrawal is tax-free; the rest is taxed as income.
ISA (Individual Savings Account)
A tax-free wrapper for investments and cash. No tax on dividends, interest, or capital gains — ever. Annual contribution cap £20,000.
GIA (General Investment Account)
A regular taxable brokerage account. Subject to capital gains tax on sales (18% basic / 24% higher rate) and dividend tax on income.
CGT (Capital Gains Tax)
UK tax on profits from selling investments. 18% if you're in the basic-rate income band, 24% if higher. The first £3,000 of gains each year is exempt.
MPAA (Money Purchase Annual Allowance)
Once you flex any SIPP income beyond the 25% tax-free portion, your annual SIPP contribution limit drops from £60,000 to £10,000. Matters if you're still working and contributing.
State Pension
The government pension paid from age 67 (rising to 68). Around £11,500/year at the full rate. Taxed as ordinary income.
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