HM Revenue and Customs (HMRC) is set to change the tax codes of state pensioners born before 1960 as it begins reclaiming the Winter Fuel Allowance for those with higher incomes. This adjustment targets individuals who received up to £300 from the Department for Work and Pensions (DWP) at the end of last year but have an annual income exceeding £35,000.
Affected pensioners will receive notification—via letter, text, or email—from HMRC about changes to their 2026/27 tax codes. These changes will result in the Winter Fuel Payment being collected as extra income tax alongside regular payments, with typical deductions around £17 per month for a £200 payment.
MoneySavingExpert, founded by BBC and ITV presenter Martin Lewis, confirms: “This will be done through a change in your tax code for 2026/27 – it’s this change that HMRC is contacting people about.”
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HMRC clarifies the process: “For those who don’t file a Self Assessment tax return, we will automatically adjust their tax code from April 2026 to recover the payment. Customers do not need to take any action or contact HMRC.”
Pensioners expecting their total annual income—combining private and state pensions plus other sources—to exceed £35,000 can choose to opt out of future Winter Fuel Payments entirely, preventing HMRC from reclaiming the amounts later. From 1 April 2026, residents of England, Wales, and Northern Ireland can opt out by submitting a form on the GOV.UK website.
Additionally, HMRC assesses each recipient’s income individually in multi-pensioner households. For instance, if one person earns £36,000 and another earns £22,000, only the higher earner’s payment will be reclaimed.