Can you take a tax-free lump sum from more than one pension?

Yes, you can take a tax-free lump sum from more than one pension, but they all draw on one shared cap of £268,275, so the sums are added together.

Pension Wise, from MoneyHelper, offers free, impartial guidance backed by government. Pensions held with different firms can also be weighed as a set by an FCA-authorised adviser, who will see your two-pension question once both pots are noted in the form on this page; we charge nothing for that.

Each pension pays its own quarter, from one shared allowance

GOV.UK states the rule for "any pension", not for one per person: up to a quarter of what each has built up can usually come out as a tax-free lump sum. So two defined contribution pots can each pay a quarter, and a third pension can do the same, as long as the schemes allow the way you want to take the money. MoneyHelper's guide adds that someone holding more than one defined contribution pension can pick a different route for each, for example a guaranteed income from one while the other stays invested for lump sums later.

What the pensions share is the cap: the lump sum allowance of £268,275, set by section 637P of the Income Tax (Earnings and Pensions) Act 2003, in the chapter substituted by Schedule 9 to the Finance Act 2024 from 2024-25. It is one total across every scheme you belong to, not a figure for each, and tax-free cash above it is charged Income Tax rather than lost. How the quarter is worked out, which payments count and which protections lift the cap are in the tax-free lump sum guide; the larger death-benefit figure has a guide of its own.

Pensions worth up to £10,000 have a separate route alongside this one: you can usually take up to 3 small pot lump sums from different personal pensions, and unlimited ones from different workplace pensions. The conditions are in small pot pension rules, and the tax on them in how small pots are taxed.

A worked example

Take two pots that have not been touched before: Pension A holds £80,000 and Pension B holds £40,000. A quarter of each is £20,000 and £10,000, so £30,000 can come out tax-free in total, while the other £60,000 and £30,000, £90,000 between them, is taxable as income when it is drawn. Someone with no earlier lump sums and no protection would then have £238,275 of the allowance left (£268,275 less £30,000). This is our own working for illustration, dated 20 October 2026, not a forecast of any provider's payout.

How each scheme knows what you have already used

Before paying a lump sum, a scheme compares it with the allowance you have left. HMRC's Pensions Tax Manual says the administrator may need details of how much allowance earlier payments used, any "benefit crystallisation events" arising at the same time from other registered pension schemes, and any protected allowance. It then adds: "How a scheme administrator establishes these details is not prescribed by legislation." A simple declaration from you may be enough in some cases; in others a more detailed questionnaire with supporting evidence may be asked for. If you do not provide the information, the administrator will assume you have no allowance available, so a record of each lump sum you take is worth keeping. Where two lump sums fall on the same day, you can decide the order in which they are treated.

If you took benefits before 6 April 2024

The lifetime allowance ended on 6 April 2024. Anyone who had benefit crystallisation events before then must use transitional rules to work out the allowance left at their first lump sum after that date, and by default 25% of the lifetime allowance previously used is deducted from it. Someone with complete and accurate records of all the tax-free benefits they received before 6 April 2024, who can show that less than 25% of those benefits were taken as tax-free lump sums, may choose instead to apply to a scheme they belong to for a transitional tax-free amount certificate. The conditions are tight: the certificate must be issued before you become entitled to a relevant lump sum; the scheme has three months from receiving the application to issue it or refuse it; and a copy must go to each of your other schemes within 90 days of receiving it, and before your first relevant lump sum.

Totalling your allowance use across every scheme before a second lump sum is a task you can hand to an FCA-authorised adviser: say so when completing our form on this page.

Defined benefit pensions: cash in exchange for income

A final salary or career average scheme gives you a pension, not a pot, so there is no fund to take a quarter of. For these scheme pensions, HMRC's manual measures the limit as a quarter of the pension's value added to the lump sum. Some schemes set a lump sum in their rules; in others there is no set lump sum entitlement, and cash may only be given by commuting, which means giving up part of the scheme pension. Either way, a pension commencement lump sum from a defined benefit scheme is deducted in full from the same allowance as your defined contribution pots. See defined benefit pensions and the lump sum allowance and the final salary lump sum.

Repeat payments from one pot, and the tax on each

For a defined contribution pot, HMRC's manual says the tax rules "do not limit the number" of uncrystallised funds pension lump sums: depending on the scheme's rules, you can take the whole pot at once or as several lump sums over time. Each payment is normally a tax-free quarter and a taxable three quarters, unless that quarter is more than the allowance you have left, and the tax-free part is deducted from the allowance every time. Providers differ on what they offer, so ask yours about repeat payments; the contrast with taking tax-free cash first is in flexi-access drawdown compared with UFPLS. Money left in the pension stays invested, so its value can fall as well as rise, and you could get back less than was paid in.

The taxable part is charged Income Tax, and how much depends on your other income for the tax year. GOV.UK warns that a large withdrawal can mean paying Income Tax at a higher rate, and owing extra at the end of the tax year. Providers usually take the tax off before paying you, and each pension may carry its own tax code. Overtaxed money can be reclaimed, as claiming back overpaid pension tax explains; the effect on paying in afterwards is in the MPAA guide.

Questions about several lump sums

Can I take a tax-free lump sum from two pensions at once?

Usually yes, if both schemes allow it, with each paying up to its own quarter. Tax-free cash above £268,275 in total is taxed unless you hold a protection.

Can I take more than one tax-free lump sum from the same pension?

For a defined contribution pot, the tax rules do not cap the number of lump sums. Whether you can do so is down to the scheme, so ask.

What if I have lost track of how much allowance I have used?

Ask each pension provider for its record of the lump sums it has paid you. A scheme given no information will treat you as having no allowance left.

Your next step

Several pensions can each pay a tax-free quarter, and every payment reduces one shared allowance. Pension Wise can explain the choices at no cost, and each provider can tell you what it has already paid out. To talk the pots through as a set, note each one in the form on this page; afterwards an FCA-authorised adviser firm phones to discuss both together, without charge.

Sources, read 20 October 2026: GOV.UK, Lump sum allowance, Tax when you get a pension, how your tax is paid; HMRC Pensions Tax Manual, PTM171000, PTM173000, PTM174100, PTM174300, PTM063240, PTM063300; legislation.gov.uk, ITEPA 2003 s637P; MoneyHelper, pension pot options (archived copy, 28 December 2025).