Pensioners with just 'modest savings' to be denied £300 Winter Fuel Payment
A alert has been issued for nine million state pensioners who could still lose £300 Winter Fuel Payments from the Department for Work and Pensions - experts have explained all
Thousands of state pensioners may be at risk of losing their £300 Winter Fuel Payments from the Department for Work and Pensions due to having "modest" savings, a building society has warned. Following a government U-turn, the Winter Fuel Allowances have been reinstated for nine million pensioners, However, those unknowingly exceeding the new £35,000 threshold may still miss out.
Coventry Building Society is warning that interest earned on standard savings accounts counts towards the threshold, which could push people already close to the limit over the edge. Jeremy Cox, head of strategy at Coventry Building Society, warned that "thousands could still unknowingly be left out in the cold - not because they're earning more, but because their savings are".
He explained that "many pensioners may not realise that interest earned on savings held outside of ISAs count towards their total taxable income".
He added: "With interest rates still relatively high, even modest savings can generate income that pushes someone over the threshold."
He noted: "ISAs offer a tax-free way to keep savings interest out of the income equation. Interest earned within an ISA is never taxed and does not count toward income calculations".
Financial planners have informed The Telegraph that those marginally above the £35,000 limit could benefit from slight alterations in behaviour, potentially providing them with an extra bit of cash this winter, reports Birmingham Live.
Alice Haine from Bestinvest referred to the new threshold as "is effectively another tax cliff-edge". She stressed: "Paying attention to what constitutes as income may become very important for those whose incomes hover around the £35,000 mark, as a minor adjustment could be the difference between receiving the payment or handing it back through tax."
Sir Steve Webb, the former pensions minister now with pension consultants LCP, made it clear: "The Government's own figures clearly suggest that they expect the number of losers from the new policy to rise each year."
He warned: "With around two million pensioners currently over the £35,000 threshold, this number could easily rise by another half a million by 2030."
Sir Steve raised concerns about a potential covert fiscal tactic, concluding with: "This could end up being another way in which governments use inflation to quietly raise additional revenue year-by-year."
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