Winter Fuel Payments will be recovered if your income exceeds £35,000, says Paul Lewis
Over the next couple of months, everyone in the UK born on 21 September 1959 or earlier will get a Winter Fuel Payment. It will be £300 per household for those born on 21 September 1945 or earlier, and £200 for the younger ones. In Scotland, the amounts are £305.10 and £203.40, and it’s called Pension Age Winter Heating Payment. Throughout the UK, couples and others sharing a home will normally get half the relevant payment each.
For about two million pensioners the cash will be short-lived, though. The payment will be recovered from anyone with a total income in 2025/26 higher than £35,000. That income includes pensions, earnings, rent, interest, dividends, the state pension and other taxable benefits. However, it does not include interest or dividends earned by tax-free ISA accounts. It is measured before any tax allowances. The income test is personal so it’s possible for one partner to lose their half of the payment and the other on a lower income to keep it.
HMRC has now explained that this winter’s payment will be recovered automatically in one of three ways, as follows.
- People who already do a self-assessment form will see the whole amount as an addition to their tax when they fill in their 2025/26 tax return – the deadline for that and paying the tax is 31 January 2027.
- People who pay tax on their other income from pensions and earnings through PAYE will pay one 12th of the payment back each month from April 2026 through extra tax on their other income, collected by reducing their tax code.
- A very few who neither do self-assessment nor have a tax code will have the money collected through the Simple Assessment procedure.
People who have opted out of the payment should check their tax code or self-assessment to make sure it has not been mistakenly taken back!
From 2027/28 the payment will be recovered in advance. So a 12th of the payment will be deducted through PAYE starting in April, even though it will not be received until November or December. In that year two payments will be recovered – one for winter 2026 in arrears and one for winter 2027 in advance. So there will be a double monthly tax charge.