Winter Fuel Payment and taxation

Sterlingtimes

I am a pensioner. My income is above £35,000. I contrive to keep my income within the 20% tax band so as not to lose the Marriage Allowance.

If the Winter Fuel Payment were thrust upon me, would this increase my taxable income (potentially pushing me into the 40% tax band)?

Is this a circumstance where I need to opt out?

Albermarle

As it is only £100 each for a married couple, it seems unlikely to affect your tax position significantly. 

SiliconChip

If your income is very close to the higher rate limit then it appears you might be tipped over

If your taxable income is more than £35,000

HMRC will take back all of your Winter Fuel Payment through either PAYE or your Self Assessment tax return.

https://www.gov.uk/winter-fuel-payment/how-much-youll-get

There is a process to opt out, which you'll need to do before 15th September.

https://www.gov.uk/winter-fuel-payment/report-change-circumstances

UnsureAboutthis

IIRC, getting "pushed into the 40%" bracket only applies to the income OVER the threshold. So the measely 100 quid, even if you did go into the 40% bracket would mean you only pay 40% on that bit of income and not the rest.

Nomunnofun1

I’m not sure that the op’s question is being answered here. 

The question is:

‘If the Winter Fuel Payment were thrust upon me, would this increase my taxable income (potentially pushing me into the 40% tax band’

The Winter Fuel payment itself is not taxable and is not added to one’s other income to determine whether or not the higher rate tax threshold has been breached. 

Having said that £35000 is nowhere near £50270 which is where one starts to pay at 40% rate. 

What is the Winter Fuel Payment?

The Winter Fuel Payment is an annual, tax-free lump sum payment intended to give older people reassurance they can afford to heat their homes in winter. 

https://commonslibrary.parliament.uk/research-briefings/cbp-10094/

sheramber

As your  taxable income is above £35,000  then the payment will be taken back by HMRC.
 

Alternatively, you can opt out of receiving it , to avoid it being clawed back.

Your rate of tax  is not relevant . It is your total taxable income that matters

Dazed_and_C0nfused

The WFP is not taxable income.

In the same way Child Benefit is not taxable income.

Poze2

Not sure if I’m posting in the correct place but I can’t see where to start a new post on Winter Fuel.

My state pension and works pension fall below the 35K criteria for being eligible for the winter fuel payment. 

However the untaxed interest I receive from savings this year will push me over 35K
I receive £1250 tax free personal allowance.
What I’d like to know is, is the tax free personal allowance deducted from the income from the pensions and savings interest or not, when calculating the taxable gross income.
If it is deducted, then my gross taxable income is below 35K
Thanks

eskbanker

Poze2 said:

Not sure if I’m posting in the correct place but I can’t see where to start a new post on Winter Fuel.

My state pension and works pension fall below the 35K criteria for being eligible for the winter fuel payment. 

However the untaxed interest I receive from savings this year will push me over 35K
I receive £1250 tax free personal allowance.
What I’d like to know is, is the tax free personal allowance deducted from the income from the pensions and savings interest or not, when calculating the taxable gross income.
If it is deducted, then my gross taxable income is below 35K
Thanks

No, the allowance isn't deducted in the way you suggest - if it was then the threshold for WFA payment would also be reduced accordingly, so you need to include your taxable savings interest income.

Dazed_and_C0nfused

Poze2 said:

Not sure if I’m posting in the correct place but I can’t see where to start a new post on Winter Fuel.

My state pension and works pension fall below the 35K criteria for being eligible for the winter fuel payment. 

However the untaxed interest I receive from savings this year will push me over 35K
I receive £1250 tax free personal allowance.
What I’d like to know is, is the tax free personal allowance deducted from the income from the pensions and savings interest or not, when calculating the taxable gross income.
If it is deducted, then my gross taxable income is below 35K
Thanks

All that matters is your total taxable income.

What your Personal Allowance, "Personal Savings Allowance" or savings starter rate band is is irrelevant.

You can manipulate interest by closing accounts early and opening new ones which pay interest on particular dates.  If you wish.

Poze2

Ok thanks for your reply.
I know that both pensions and untaxed savings are taxable income and are included in the calculations.

I wasn’t sure if the personal tax free allowance, was deducted from all those amounts to establish gross taxable earnings.