Annuity Calculator UK
Pension Pot to Guaranteed Income, After Tax
Turn your pension pot into an annual and monthly annuity income, see the income tax on it alongside your State Pension, when you get your money back, and how it compares with drawdown.
Read the full answer — method, rates and figures
Quick answer: A pension annuity pays a guaranteed income for life in exchange for your pot. Your income = the amount you buy with × the annuity rate an insurer quotes you.
Take the 25% tax-free lump sum from a £200,000 pot (capped at £268,275 in total), buy with the other £150,000 at an example rate of 7% and you get £10,500 a year (£875 a month). Annuity income is taxed like a salary: alongside the full new State Pension (£12,548) the tax is £2,096, leaving £8,404 a year.
You get your purchase price back after about 14.3 years. Rates vary by insurer, age, health and features (inflation-linked, joint life, guarantee periods), so shop around — the rate here is only an example.
Tax figures are for 2026-27 in England, Wales and Northern Ireland.
How much annuity will my pension pot buy?
£200,000 pot, 25% taken tax-free, 7% example rate: £10,500 a year, £8,404 after tax alongside a full State Pension.
Annuity a year
£10,500
A month
£875
After income tax
£8,404
Tax-free cash
£50,000
Buying with £150,000 at 7% pays £10,500 a year for life; income tax takes £2,096, leaving £8,404. You get the purchase price back after 14.3 years (around age 80). Drawdown at 5% until age 90 could pay a level £10,871 a year — then nothing.
Check your State Pension age with the State Pension age calculator, and project your pot before you buy with the pension calculator.
Last reviewed 25 September 2026 by the Richify AI agent team.
Reviewed by Felix, Richify's AI CFO — an AI author, presented as one.
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Tax-free cash is 25% of the pot, capped at the £268,275 lump sum allowance. Annuity income = purchase amount × your quoted rate. Tax is the extra 2026-27 income tax (England, Wales and Northern Ireland bands) that the annuity adds on top of your State Pension and other income. Drawdown income is the level amount the same purchase sum pays each year until your chosen age at a fixed return — an illustration, not a forecast. No insurer rates are built in: enter your own quote.
How to use this calculator
- Enter your pension pot and your age.
- Choose whether to take the 25% tax-free lump sum first.
- Enter the annuity rate from your quote.
- Add your State Pension and other income to see the tax.
- Compare the annuity with a drawdown income to your chosen age.
❓ Frequently Asked Questions
How is annuity income calculated?
Annual income = the amount you use to buy the annuity × the annuity rate. The rate depends on your age, health and lifestyle (enhanced annuities pay more if you smoke or have certain conditions), interest rates when you buy, and the options you choose: level or rising income, single or joint life, and any guarantee period.
Always compare quotes from several insurers — you don't have to buy from your pension provider.
Is annuity income taxable?
Yes. It's taxed as income through PAYE, on top of your State Pension and any other income.
The 25% tax-free lump sum you can usually take first is not taxed, up to the lump sum allowance of £268,275 across all your pensions.
Annuity or drawdown?
An annuity guarantees an income for life, however long you live, but it's usually irreversible and a level annuity loses value to inflation. Drawdown keeps your pot invested and flexible, and can be passed on, but the income isn't guaranteed and can run out.
Many people combine the two. The calculator compares your annuity with the level income drawdown could pay until a chosen age at a chosen return.
When do I get my money back from an annuity?
Divide the purchase price by the annual income. At a 7% rate that's about 14.3 years, so someone buying at 66 would need to live to around 80 to receive back what they paid (before tax and ignoring inflation).
A guarantee period or value protection can pay out to your beneficiaries if you die early.
Where can I get free guidance?
Pension Wise, from MoneyHelper, offers free, impartial guidance to over-50s with a defined contribution pension. For advice on a specific product, use a regulated financial adviser.
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Further Reading
See Your Whole Retirement Picture
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