winter fuel payment - anyone planning around it?

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82039469#Comment_82039469

Not working ( since 2015), and also not yet in drawdown.

Been growing the Sipp pot by way of investment returns, to markedly increase the eventual 25% tax free lump sum withdrawal available. The £2,880 annual sipp contributions ( with the attendant relief and tax savings) is a no brainer in that respect.

Silvertabby

Mr S was just on the cusp last year, but HMRC decided that he was 'over' so he's paying it back via tax. Will opt out this year.

BlackKnightMonty

https://forums.moneysavingexpert.com/discussion/6673029/winter-fuel-payment-anyone-planning-around-it

it’s not “free”.

QrizB

^ Correct, it's not "free", it's a small part of the redistributive tax-and-benefits system we all enjoy.

kempiejon

https://forums.moneysavingexpert.com/discussion/comment/82039469#Comment_82039469

If in drawdown include the grossed up £3600 in one's annual draw up to the personal allowance and the whole £720 is extracted. As you've noticed ones tax position and other income are important. As is being over 55 of course.

DrSparsamkeit

Thread resurrection time, with a real-life example of possible planning around the WFP.

I received the WFP in tax year 2025/2026 because my income from state pension plus DB pension plus savings interest was less than £35k. (The savings interest was £946, so taxable but untaxed as it was below the Personal Savings Allowance.)

Tax year 2026/2027 will be much the same, except that I intend to withdraw from a DC pension (held with AJ Bell) using flexi-access drawdown. Am I correct in thinking that the 25% tax free part of the portion which I crystallise does not contribute to the WFA threshold calculation and the 75% taxable part would only be included in the calculation if I received it as income in the 2026/2027 tax year?

This may be one way to receive the WFP for another year and, yes, it may be a case of tax tail wagging the investment dog. I'll have to calculate whether alternative uses of the 75% taxable part yield more that WFA!

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82046053#Comment_82046053

I have difficulty understanding anyone taking time and effort to strategise how to secure a £200 government benefit, by manipulating their retirement income.

My own objective is to try and measurably increase my retirement income annually to hopefully outpace a disconcerting level of personal inflation.

Have therefore permanently opted out of WFA as a higher rate tax payer. £200 in the scheme of things is neither here nor there.

mrklaw

https://forums.moneysavingexpert.com/discussion/comment/82046215#Comment_82046215

sure but as mentioned people go through the 2880 thing which is an even lower overall benefit

I’ll probably just opt out but it’s quite possible you can make small adjustments to where you draw from

especially if ISAs or cash aren’t considered income

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/82046053#Comment_82046053

You've confused me a bit with this.

Do your plans for 2026/27 involve taking extra DC pension income or not?

Also, I suspect you will find the £946 was taxed, just at a 0% tax rate.

SacredStephan

I received the WFP in tax year 2025/2026 because my income from state pension plus DB pension plus savings interest was less than £35k

WFP is paid by the DWP who don't know your income. You received the WFP because you were an eligible pensioner. You were not required to repay it because HMRC determined that your income was below £35K.