Starting from the 2025/26 tax year, individuals over State Pension age will remain eligible for the Winter Fuel Payment. However, pensioners with annual incomes exceeding £35,000 will have this payment clawed back through the tax system, as announced by the Department for Work and Pensions (DWP).
Under current DWP guidelines, state pensioners born between 1947 and 1959 are entitled to receive a £200 Winter Fuel Payment. HM Revenue and Customs (HMRC) has clarified that if a pensioner’s total yearly income exceeds £35,000, the Winter Fuel Payment will be reclaimed via an adjustment in their tax code.
Importantly, HMRC assesses each individual’s income separately within a household. For example, if one partner earns £36,000 and the other earns £22,000, only the higher earner’s Winter Fuel Payment will be reclaimed, while the other partner keeps their payment.
Come April 2026, beneficiaries will receive a letter or email informing them of changes to their tax code to recover the Winter Fuel Payment. This adjustment will initially appear as an underpayment, which will be reviewed once income for the 2025 to 2026 tax year is fully confirmed to decide if repayment is necessary.
Additional guidance from HMRC states that if a pensioner’s income does not exceed the threshold, their tax code will be updated to remove any previous recovery actions. Furthermore, HMRC will request pension providers or employers to refund any excess amounts already deducted from pension or employment income.
In cases where the full reclaimed amount cannot be collected within the tax year through the tax code, HMRC will provide a separate tax calculation to address the remaining balance.