Tax on a £10,000 pension withdrawal — a modest first withdrawal.

A £10,000 pension withdrawal is one of the most common first drawdowns — often taken to test the process or cover a specific expense. If taken as an uncrystallised funds pension lump sum (UFPLS), 25% (£2,500) is tax-free and the remaining £7,500 is added to your taxable income. For most retirees whose only other income is the state pension of around £12,000, this keeps total income well within the basic rate band. The tax bill on the taxable portion would typically be £1,500 at 20%, giving you £8,500 net. Be aware that your provider will likely apply emergency tax on the first withdrawal, deducting significantly more upfront. You can reclaim the overpayment via HMRC form P55 or wait for automatic reconciliation at the end of the tax year.