Winter Fuel Payment charge?

ccluedo

Hi,

I have an entry under Deductions for current tax year ends 5th April 2026 which I don't understand.

"Winter fuel payment charge - based on a charge of £(0)" £968

I expected to repay my WFA as income over the threshold, but it wasn't £968…..

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6661771/winter-fuel-payment-charge

Are you a Scottish taxpayer?

Who pays tax at the intermediate rate?

Are you sure you have read the tax code(?) correctly?

968 extra pension taxed x 21% is just over £203, which is one of the rates our generous government has paid to outdo the DWP 😉

cr1mson

That is the reduction of your tax free amount so you will have to pay tax on that amount which means would be paying about £200.

This explains it better

Paying back the Winter Fuel Payment - GOV.UK

ccluedo

https://forums.moneysavingexpert.com/discussion/comment/81941747#Comment_81941747

I am indeed a Scottish taxpayer. I just expected to see a cash deduction which matched the payment. Talk about confusing!

Thanks for the explanation and more so for no doubt saving me a lengthy time on hold on the phone.

ccluedo

Thanks for the link, appreciated.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81941758#Comment_81941758

You would see that in your PAYE or Self Assessment tax calculation once the tax year has ended.

But tax codes work slightly differently for things like this, if you were fortunate enough to be paying the Scottish "top" rate the deduction would only need to be £452.

But it would be 45% tax being paid on that £453 (so an extra £203 tax should be deducted).

It's a bit like the confusion Marriage Allowance causes when people see the extra "allowance" in their tax code and mistakenly think their Personal Allowance is now £13,830.

Albermarle

I just got a new tax code for 27/27 with it being reduced by £500 to claw the £100 WFA back.

I was surprised as I had made some effort to keep my taxable income ( from pensions) below £35K. However I forgot to take account of savings interest, which just nudged me over the threshold. 😕

I think I will just opt out next year.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81941905#Comment_81941905

But presumably HMRC are just having to estimate savings interest at the moment, for this year and next, so might there be wriggle room in 26/27 to manipulate things to your advantage?

Or is your pension income going to increase and tip you over the threshold irrespective of any interest?

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81941908#Comment_81941908

I have some fixed pension ( state and DB) but < £30K.

However as is sometimes advised on the Pensions board, for people with reasonably large pension provision, I am thinking of extracting the maximum I can each year from my SIPP at 20% tax. So as to avoid maybe paying some 40% tax at a later date.

In the long run this will probably be of more benefit than a £100 WFA.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81941919#Comment_81941919

Yeah, it's just another thing people will need to start thinking about when looking at the overall situation.

Taking extra from DC pensions to use basic rate band seems an increasingly popular option at the moment but might be fractionally less popular in future.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81941819#Comment_81941819

Can't even get the tax rate right 😭

Top rate is now 48% so it would be £423/424, not £453.