Taking lump sums directly from your pension - 25% tax-free, 75% taxed as income.
UFPLS (Uncrystallised Funds Pension Lump Sum)
Taking lump sums directly from your pension - 25% tax-free, 75% taxed as income.
By Scrimpr
Updated 18 Jan 2026 What is a UFPLS?
UFPLS stands for Uncrystallised Funds Pension Lump Sum. It’s a way to take money from your pension without setting up drawdown first. You take lump sums directly from your uncrystallised pot—25% tax-free, 75% taxed as income.
How does it work?
Each time you take a UFPLS:
- 25% is tax-free
- 75% is taxed as income – added to your other earnings that year
If you take £10,000 as a UFPLS, £2,500 is tax-free and £7,500 is taxable.
UFPLS vs drawdown
With drawdown, you move money into a separate pot, take your 25% tax-free upfront if you want, then withdraw from the taxable portion over time.
With UFPLS, you take lump sums directly. Each withdrawal mixes the tax-free and taxable portions together. Simpler, but less flexible for tax planning.
When might you use UFPLS?
- You want occasional lump sums rather than regular income
- You have a small pension pot and don’t need the complexity of drawdown
- You want to keep things simple
Watch the tax
Taking large UFPLS withdrawals can push you into a higher tax bracket. If you take £40,000 in one go, that £30,000 taxable portion might push you from basic rate to higher rate tax. Spreading withdrawals across tax years can reduce the tax bill.
Key points
- Lump sums directly from your pension – no drawdown setup needed
- 25% tax-free, 75% taxed – every withdrawal
- Simpler than drawdown – but less flexible
- Watch your tax bracket – large withdrawals can trigger higher rates
