Not the case where I teach - it's allocated by the school.
Lots goes on booster classes (not just for PP students, although statistically they'll be more likely to be recommended for these.)
We also use it for subsidising enrichment activities - trips & sports, usually.
The only incident I can recall that PP students were specifically eligible for something that others weren't was at the back end of last year when students had a chance to order some revision textbooks through school. The kids with PP had their books bought for them.
This caused a minor upset when a student who was on FSM some years ago got the books free & her best friend didn't, as both girls were very aware that the family of the girl on PP are doing rather well now, whereas her friend's family are struggling but not quite eligible for FSM.
They agreed between themselves to share the books, but both were thoroughly embarrassed about the whole business.
It's always going to be a bit 'broad brush' in determining greatest need, which is one good reason to leave control of the fund in the school's hands.
We are required to show that whatever we're doing with it is benefitting the students who attract the funding - just not to ringfence it for individual students.