The Department for Work and Pensions (DWP) has confirmed the method for reclaiming Winter Fuel Payments from certain state pensioners. Under the new scheme, retirees with incomes exceeding £35,000 will have to repay part or all of their Winter Fuel Payments, with deductions reaching as much as £33 per month.
This year, nine million pensioners received Winter Fuel Payments ranging from £100 to £300. However, those whose income disqualifies them from the benefit will see their payments clawed back through adjustments to their tax codes. HM Revenue & Customs (HMRC) will collect these repayments in instalments by reducing pension payments.
For example, retirees under 80 who received a £200 payment will face monthly deductions of approximately £17 starting in the 2026-2027 tax year. This amount is projected to increase to around £33 per month in the 2027-2028 tax year, as the repayment accumulates for two years. The deduction will then return to roughly £17 monthly in the 2028-2029 tax year. Pensioners who file self-assessment tax returns will have the repayment included automatically in their 2025-2026 tax return.
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Rachel Reeves, a Labour Party MP, commented on the decision: “Targeting Winter Fuel Payments was a tough but necessary choice due to the financial legacy from the previous government. It’s important that this payment remains means-tested to ensure fairness, rather than extending eligibility to all, including the wealthiest.”
Reeves also highlighted positive changes to the scheme: “We have expanded eligibility so that no lower-income pensioner in England and Wales will miss out, meaning over three-quarters of pensioners will receive the payment this winter.”