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People with 'modest' savings could miss out on £300 DWP Winter Fuel Payment under new rules
People with 'modest' savings could miss out on £300 DWP Winter Fuel Payment under new rules
The Department for Work and Pensions is set to deny thousands the support with experts warning of several factors you should be aware of
State pensioners could lose out on £300 Winter Fuel Payments from the Department for Work and Pensions due to having "modest" savings
(Image: WalesOnline/Rob Browne )
State pensioners could lose out on £300 Winter Fuel Payments from the Department for Work and Pensions due to having "modest" savings. Following a recently-announced Labour Party government reversal, DWP Winter Fuel Allowances will be sent out to nine million pensioners later this year.
However, Coventry Building Society has issued a warning that numerous state pensioners might inadvertently surpass the new £35,000 limit. For the best money-saving tips straight to your inbox, sign up to our Money newsletter here
Interest accrued on standard savings accounts is deemed taxable income and contributes towards the threshold, even if it's within the Personal Savings Allowance and remains untaxed.
For individuals nearing the £35,000 threshold already, additional income from savings could tip them over the edge.
Jeremy Cox, head of Strategy at Coventry Building Society, cautioned that "thousands could still unknowingly be left out in the cold - not because they're earning more, but because their savings are."
He pointed out that "many pensioners may not realise that interest earned on savings held outside of ISAs count towards their total taxable income."
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He added: "With interest rates still relatively high, even modest savings can generate income that pushes someone over the threshold," reports Birmingham Live.
He advised: "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 advisers speaking to The Telegraph emphasised that those slightly above the £35,000 threshold could engage in minor behavioural tweaks to enjoy a financial uplift this coming winter.
Alice Haine, from investment service Bestinvest, referred to the updated limit, saying: "It's effectively another tax cliff-edge."
"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," Ms Haine said.
Sir Steve Webb, ex-pensions minister and partner at pension consultancy LCP, said: "The Government's own figures clearly suggest that they expect the number of losers from the new policy to rise each year.
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"With around two million pensioners currently over the £35,000 threshold, this number could easily rise by another half a million by 2030.
"This could end up being another way in which governments use inflation to quietly raise additional revenue year-by-year."
