HM Revenue and Customs (HMRC) has implemented new earnings-based rules affecting Winter Fuel Payments for millions of state pensioners. Under this updated regulation, Winter Fuel Allowances will be means-tested against individual income, with repayments required for those earning more than £35,000.
For most recipients, repayment will occur automatically through the Pay As You Earn (PAYE) system via changes to their tax code in the 2026/27 tax year. If you complete a self-assessment tax return—common among the self-employed or high earners—the repayment will be collected through your 2025/26 tax return.
HMRC explains that recipients cannot prepay the amount owed; instead, repayments will be spread over subsequent tax months. For instance, a typical £200 Winter Fuel Payment will result in an approximate monthly tax increase of £17 until the amount is fully recovered.
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Affected individuals will receive notification of the tax code adjustment either through a letter or the HMRC app. Should HMRC be unable to recover the full repayment via tax code changes in the 2026/27 year, a final tax calculation will be sent to reconcile outstanding amounts.
An HMRC spokesperson stated, “Most repayments will be handled automatically through tax codes, while those registered for Self Assessment will see repayments on their tax returns. We have provided clear online guidance and a repayment calculator to help pensioners understand their obligations.”