Taxing the WFP would seem a simple option for those already paying tax. For a basic rate taxpayer, a coding adjustment of £1000 would clawback £200.
However, it might require some people to self assess just as those higher earners subject to the Child Benefit clawback have to do.
There’s an inherent problem in asking people who may already be struggling week-to-week, to put money aside for tax.
I also see unfairness because the state pension is taxable while pension credit is not. If all someone has is an income topped up by Guaranteed Pension Credit to £218 pw then they are going to be under the tax threshold but for someone whose income comprises a State Pension of £218 plus some other income that just takes them over the theshold, they will have the whole pension taken into account in calculating their tax liability.
There will be people now who have State Pension and Additional State Pension that, without any other income, takes them over the tax threshold. The maximum weekly Additional State Pension (aSP) is £218.39 paid on top of basic state pension. I know a few older women who have inherited their husband’s state and aSP entitlement, or a good percentage of, and have pensions in excess of £300 a week. The maximum you could have is £388 pw. The trade of is that they have little or nothing in the way of works pensions.
This why former Pensions Minister Steve Webb has been in the news again talking about widows who are being underpaid state pension:
www.theguardian.com/money/article/2024/aug/10/uk-state-pension-thousands-underpaid-widows-widowers-dwp
It has never been more important to make sure that you know what you are entitled to and claim it.
Bereavement wipes out everything


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