HM Revenue and Customs (HMRC) will begin reclaiming the £200 Winter Fuel Payment from state pensioners whose total taxable income surpasses the £35,000 threshold. This change primarily affects state pensioners born after 1951 who are on the new state pension scheme.
Under the new rules, pensioners who earn £22,453 from sources other than the state pension could exceed the £35,000 income limit once their full state pension—valued at £12,457—is included. This means the Winter Fuel Payment will be gradually clawed back through an adjustment in their tax code for the 2026/27 tax year.
Martin Lewis, founder of Money Saving Expert, explains: “If your annual income is above the £35,000 threshold, you’ll repay the Winter Fuel Payment as extra tax alongside your normal Income Tax payments over the coming 2026/27 tax year. This will be reflected in a tax code change, which HMRC is currently notifying affected individuals about.”
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The means testing applies to the individual’s total taxable income, which includes private pensions, the State Pension, employment or self-employment earnings, and interest on non-ISA savings. However, it excludes income from ISAs, capital gains, the Winter Fuel Payment itself, Pension Credit, Attendance Allowance, and other tax-free benefits.
For instance, in mixed-age households, an individual aged 80 or over with income exceeding £35,000 will need to repay the £200 Winter Fuel Payment. Conversely, pensioners under 80 earning less than £35,000 will retain a £100 payment, resulting in a net household benefit.
The Labour government has clarified that the means test is based strictly on taxable income. This approach aims to target support where it’s most needed amid ongoing energy price concerns.
Martin Lewis also commented on the previous Winter Fuel Payment thresholds, noting that prior limits allowed only those earning under £11,800 to qualify for £200 or £300 payments. With rising energy costs and reduced support elsewhere, many pensioners just above that limit faced financial challenges.