[merged]
One for Panda, I think.
The UK Winter Fuel Payment can be claimed by non-residents, so can be claimed by people in Germany. It is not part of the UK state pension but just a state benefit that is payable to a range of benefit recipients, including those in receipt of the state pension.
In the UK it is tax exempt, so how would a person resident in Germany treat it for German tax purposes? Presumably the same as a comparable German benefit, if there is such a thing, but the question has popped up on another forum...
UK Pension Winter Fuel Payment and bonuses
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Re: UK Pension Winter Fuel Payment and bonuses
I expect some of you may have seen the outrage in the UK press surrounding the WFP, not least because they allege that those in the EU will continue to be eligible. Don't believe everything you read in the press.
The relevant GOV UK guidance is being updated and will be published later this month. But as I read the legislation the only EU residents who will still qualify for the payment are those covered by the Withdrawal Agreement, so not people who moved to the EU for the first time after 2020, and who is entitled a benefit in their country of residence that is comparable to the list of benefits in the UK that make you eligible to still receive the payment.
https://www.legislation.gov.uk/uksi/202 ... ade#f00011
The relevant regulation are 3 and 7(2). The Explanatory Note says:
"These Regulations require the Secretary of State to pay a winter fuel payment to a person who, in the week beginning on the third Monday in September in any year, has reached pensionable age, and
The second bullet is the one relevant to EU residents - the sufficient link to the UK has always been required but the rest is new. The EN goes on to say:
"Provision is also made for the provisions giving entitlement to winter fuel payments to persons habitually resident in one of the countries listed in Schedule 1 to expire on 1st April 2025."
Schedule 1 is the list of EU countries that still qualify - that Schedule and all references to it are revoked from 1 April 2025.
So, if you have received the payment in previous years, I doubt it will come automatically this year. You will no doubt need to make a new claim, demonstrating you are within the WA and that you are entitled to a relevant benefit in Germany. Whether that pain will be worth it for one more £200/£300, is perhaps moot!
The relevant GOV UK guidance is being updated and will be published later this month. But as I read the legislation the only EU residents who will still qualify for the payment are those covered by the Withdrawal Agreement, so not people who moved to the EU for the first time after 2020, and who is entitled a benefit in their country of residence that is comparable to the list of benefits in the UK that make you eligible to still receive the payment.
https://www.legislation.gov.uk/uksi/202 ... ade#f00011
The relevant regulation are 3 and 7(2). The Explanatory Note says:
"These Regulations require the Secretary of State to pay a winter fuel payment to a person who, in the week beginning on the third Monday in September in any year, has reached pensionable age, and
- is ordinarily resident in England and Wales and entitled to income support, income-based jobseeker’s allowance, state pension credit, income-related employment and support allowance or universal credit (“relevant benefits”) or an award of child tax credit or working tax credit of not less than £26 in respect of the tax year 2024-25; or
- is habitually resident in one of the countries listed in Schedule 1 and demonstrates an entitlement to a benefit in that country which is equivalent to a relevant benefit, if that person is covered by the Withdrawal Agreement or one of the other Agreements listed in regulation 2(3)(b) and they are able to demonstrate a genuine and sufficient link to the United Kingdom."
The second bullet is the one relevant to EU residents - the sufficient link to the UK has always been required but the rest is new. The EN goes on to say:
"Provision is also made for the provisions giving entitlement to winter fuel payments to persons habitually resident in one of the countries listed in Schedule 1 to expire on 1st April 2025."
Schedule 1 is the list of EU countries that still qualify - that Schedule and all references to it are revoked from 1 April 2025.
So, if you have received the payment in previous years, I doubt it will come automatically this year. You will no doubt need to make a new claim, demonstrating you are within the WA and that you are entitled to a relevant benefit in Germany. Whether that pain will be worth it for one more £200/£300, is perhaps moot!
Re: UK Pension Winter Fuel Payment and bonuses
The new British government has certainly caused much dismay with their WFP withdrawal from so many. Surely a first step would have been to withdraw the payment from higher rate tax payers? My dad’s wealthy friends used to laugh about it and spend it on a night out!
As I’m 9 years away from UK pension age (I only have UK pensions), I’m now worried having read that means testing state pension/new state pension is being considered. Could that really affect anyone that has fully paid for all qualifying years? Also, the 25% tax free on private pension lump sums may be scrapped. Can this affect long standing existing policies? I’m aware that DE would tax the 25% as not wholly UK taxed and so wouldn’t make a huge difference. I guess there’s so much speculation at the moment.
As I’m 9 years away from UK pension age (I only have UK pensions), I’m now worried having read that means testing state pension/new state pension is being considered. Could that really affect anyone that has fully paid for all qualifying years? Also, the 25% tax free on private pension lump sums may be scrapped. Can this affect long standing existing policies? I’m aware that DE would tax the 25% as not wholly UK taxed and so wouldn’t make a huge difference. I guess there’s so much speculation at the moment.
Re: UK Pension Winter Fuel Payment and bonuses
Personally, I think the WFP should be means-tested as pretty-much anyone with pension provision amounting to more than the full new state pension, probably doesn't need it. However, their chosen methodology to achieve that looks to me to be the "easiest and cheapest" option to deliver the policy while also setting the test at the wrong level. However, if you look at the policy behind the new state pension and the level of Pension Credit, it was set to keep more people out of the benefit system. And if that is the case, why would you be topping it up as a universal benefit?
The chosen methodology is easy - does the DWP computer see the relevant benefit claim/award? If so, pay WFP. The alternatives require new programming to link DWP systems with, say, HMRC's records to see if a person has other income, or is at, or above the personal allowance and so on. All much more expensive to develop and complex to operate. They could have cut the amount in half this year and to zero next year but that would prolong the "noise". So a political decision to do this as cheaply and quickly as possible.
As for the rest of the rumours they are no more than that as there are rarely leaks in advance of the Budget, not least because you will be sacked if you are found out! A Deputy Director I used to work with let some secrets slip to his partner who worked for a large accounting firm and the cat was out of the bag. When it all came out, he was escorted from the premises, never to return!
Means testing the state pension, which is a contributory state benefit, not a personal pension pot into which you have paid, could come at some point but would, I think, count as a significant change to the system, for which all parties have committed to giving at least 10 years' notice. (The increase in pension age for women gave something like 15 years' notice from the Budget 1993 announcement and then the Pensions Act 1995, if memory serves). Anyway, such a change would need at least 1 round of public consultation and receive massive push-back during the legislative process - at least as strong as the Rwanda issue - and it would need to be supported by successive governments though successive elections before coming into effect. I also think any means testing would initially be set at the higher-rate threshold for tax but then, what do I know?
The 25% lump sum seems to me to be potentially lower-hanging fruit. From a public finance perspective, private pensions a re incredibly expensive/generous. A pension is deferred, untaxed, employment income, which has also benefitted from tax-free growth for ~40 years. At the moment that can mean a tax advantage at the start, and during those 40 years, of 45%. When it is then drawn down in retirement it is taxed, often at only 20%. In that context, what is the policy rational to also exempt 25% of those deferred earnings from tax? Difficult to come up with one really. So, any government could decide to change the tax law that currently exempts that 25% from tax. Would that be unfair and could you really find a rational argument to defeat such a measure? Answers on a postcard...
We can all have opinions and fears before a Budget and the press and SM are exploiting people's fears more than usual this time, so let's all sit back and wait to see what is actually announced in a few weeks, and then adapt our lives and planning as we do after any Budget...
The chosen methodology is easy - does the DWP computer see the relevant benefit claim/award? If so, pay WFP. The alternatives require new programming to link DWP systems with, say, HMRC's records to see if a person has other income, or is at, or above the personal allowance and so on. All much more expensive to develop and complex to operate. They could have cut the amount in half this year and to zero next year but that would prolong the "noise". So a political decision to do this as cheaply and quickly as possible.
As for the rest of the rumours they are no more than that as there are rarely leaks in advance of the Budget, not least because you will be sacked if you are found out! A Deputy Director I used to work with let some secrets slip to his partner who worked for a large accounting firm and the cat was out of the bag. When it all came out, he was escorted from the premises, never to return!
Means testing the state pension, which is a contributory state benefit, not a personal pension pot into which you have paid, could come at some point but would, I think, count as a significant change to the system, for which all parties have committed to giving at least 10 years' notice. (The increase in pension age for women gave something like 15 years' notice from the Budget 1993 announcement and then the Pensions Act 1995, if memory serves). Anyway, such a change would need at least 1 round of public consultation and receive massive push-back during the legislative process - at least as strong as the Rwanda issue - and it would need to be supported by successive governments though successive elections before coming into effect. I also think any means testing would initially be set at the higher-rate threshold for tax but then, what do I know?
The 25% lump sum seems to me to be potentially lower-hanging fruit. From a public finance perspective, private pensions a re incredibly expensive/generous. A pension is deferred, untaxed, employment income, which has also benefitted from tax-free growth for ~40 years. At the moment that can mean a tax advantage at the start, and during those 40 years, of 45%. When it is then drawn down in retirement it is taxed, often at only 20%. In that context, what is the policy rational to also exempt 25% of those deferred earnings from tax? Difficult to come up with one really. So, any government could decide to change the tax law that currently exempts that 25% from tax. Would that be unfair and could you really find a rational argument to defeat such a measure? Answers on a postcard...
We can all have opinions and fears before a Budget and the press and SM are exploiting people's fears more than usual this time, so let's all sit back and wait to see what is actually announced in a few weeks, and then adapt our lives and planning as we do after any Budget...
Re: UK Pension Winter Fuel Payment and bonuses
The GOV UK guidance on WFP has been updated and is, as expected, and as I described in my earlier post - this year you get it only if you are covered by the Withdrawal Agreement and get a comparable benefit in your country of residence as you would need in the UK to qualify for it.
The guidance is silent on future years but my understanding is still that the law changes again on 1 April 2025 and that UK residence becomes a requirement.
https://www.gov.uk/winter-fuel-payment/ ... ive-abroad
The guidance is silent on future years but my understanding is still that the law changes again on 1 April 2025 and that UK residence becomes a requirement.
https://www.gov.uk/winter-fuel-payment/ ... ive-abroad