How tax is paid on money you take from your pension pot
You can take a lump sum of up to 25% of your pension pot tax-free. Once you’ve had your tax-free lump sum, any money taken from your pension pot is added to any other income you get in the tax year you take it. This includes paid work, taxable income from additional pension pots and your State Pension. If at the end of the tax year, you’ve either under or overpaid on tax, it’s your responsibility to sort it out with HM Revenue and Customs (HMRC).
If you have an annuity, HMRC usually gives your pension provider your tax code. Your provider will then take off the tax you need to pay from your payments before they’re paid to you.
The tax treatment depends on your individual circumstances. Your circumstances and tax rules may change in the future.