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: 28 September 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 £5,128.88 withheld, when someone with £12,000 of other income actually owes £2,886 on it. 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)
£5,128.88
You receive £14,871.13 of your £20,000.00 withdrawal (£5,000.00 tax-free)
Tax Actually Due
£2,886.00
Your Refund
£2,242.88
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 for guidance only. It is not financial or tax advice: check anything you rely on against the official source or a qualified adviser. Rates and figures come from HMRC, GOV.UK and The Pensions Regulator and are reviewed for the 2026/27 tax year. Everything is calculated in your browser; nothing you enter is sent to our servers.
How It Works
When you take your first flexible payment from a defined contribution pension, whether through drawdown or an 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 a single month of an ongoing salary: one twelfth of the Personal Allowance, £1,047.50, at 0%, one twelfth of the basic-rate band at 20%, one twelfth of the higher-rate band at 40%, and anything beyond that at 45%. A large one-off withdrawal therefore has far more tax withheld than you actually owe for the year.
The scale of the problem is easy to underestimate. In April to June 2026 alone, HMRC repaid £50.35 million to people over-taxed on pension withdrawals, across 12,612 P55, P53Z and P50Z reclaim forms (HMRC pension schemes newsletter 183, July 2026). From April 2025 HMRC moves people who keep withdrawing onto a cumulative code much faster, which fixes repeat withdrawals within a payment or two, but the very first payment from a new drawdown arrangement is still typically over-taxed under Month 1, because the provider has no code for you when it runs payroll.
Three numbers come out of the calculation. The first is the emergency tax your provider will withhold. The second is the tax genuinely due on the withdrawal given your other income for the year, since the taxable part simply stacks on top of that income through the normal annual bands, or the Scottish bands if you are a Scottish taxpayer. The third is the difference, which is the refund waiting to be reclaimed. Only 75% of an UFPLS payment is taxable in the first place, because the 25% tax-free element never enters the calculation at all.
Putting figures on it shows how wide the gap can be. A £20,000 first withdrawal with 25% tax-free leaves £15,000 taxable, and the Month 1 slices tax £1,047.50 at nothing, £3,141.67 at 20%, £7,286.67 at 40% and the remaining £3,524.17 at 45%, withholding £5,128.88. Someone with £12,000 of other income would genuinely owe £2,886 on that money, which leaves £2,242.88 sitting with HMRC until it is asked for.
Getting the money back quickly means picking the right form. P55 covers a partial withdrawal where you are not taking regular payments from the pot. P53Z applies if you emptied the pot and have other taxable income. P50Z applies if you emptied the pot and have no other income this tax year. All three are filed free through your Personal Tax Account on GOV.UK, and refunds typically arrive within 30 days. Doing nothing works eventually too, because HMRC reconciles automatically after 5 April and issues a P800 letter.
One practical move avoids most of the trouble. Taking a small first withdrawal, say £100, triggers the emergency code on a trivial amount, and by the time the second and larger withdrawal comes round HMRC has usually issued a cumulative code, so the correct tax comes out in real time. Either way this is a cash-flow problem rather than a permanent loss, though few people relish lending HMRC several thousand pounds for a month or more.
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% (£628.33), £7,286.67 at 40% (£2,914.67), £3,524.17 at 45% (£1,585.88) → £5,128.88 withheld
- Actually due: £12,000 other income leaves £570 of the Personal Allowance, so £14,430 of the £15,000 is taxed at 20% → £2,886
- Overpaid: £5,128.88 − £2,886 = £2,242.88 → 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 code 1257L on a Month 1 basis, which HMRC requires for a first flexible withdrawal when your correct code is not held. Month 1 treats the single payment as one month of an ongoing salary, so only £1,047.50 is tax-free, the next £3,141.67 is taxed at 20%, the next £7,286.67 at 40%, and everything above that at 45%. On a £15,000 taxable withdrawal that means £5,128.88 withheld even though most people owe a fraction of it for the year. The overpayment is fully reclaimable.
- Which form reclaims emergency pension tax, P55, P53Z or P50Z?
- It depends on whether the withdrawal emptied your pot and whether you have other taxable income this year. P55 is for a partial withdrawal where you are not taking regular payments. P53Z is for an emptied pot where you have other taxable income, such as a job, State Pension or another pension. P50Z is for an emptied pot with no other taxable income this tax year. All three are free to file through your Personal Tax Account on GOV.UK, and HMRC aims to refund within 30 days.
- Did the April 2025 HMRC change fix emergency tax on pensions?
- Partly. From April 2025 HMRC replaces temporary codes with cumulative ones far faster for people newly receiving pension income, so repeat withdrawals now correct themselves within a payment or two instead of waiting until the year end. The first flexible payment from a new arrangement is still normally taxed on the Month 1 basis, because the provider has no code for you when it runs payroll. The workaround remains a token first withdrawal, say £100, to trigger a proper code before taking the real amount.
- Do Scottish tax rates apply to my pension withdrawal?
- Yes, if you are a Scottish taxpayer, meaning your main home is in Scotland and your code carries an S prefix. The taxable part of a pension withdrawal is non-savings income, so it is taxed at the Scottish rates for 2026/27, which are 19% starter, 20% basic, 21% intermediate, 42% higher, 45% advanced and 48% top. The 25% tax-free entitlement and the reclaim forms are identical across the UK, and the emergency Month 1 mechanics work the same way on one twelfth slices of the Scottish bands.