The Department for Work and Pensions (DWP) has reminded pensioners that Winter Fuel Payments, worth up to £300, may be recovered through taxation for those with individual incomes above £35,000. A new HM Revenue and Customs (HMRC) online calculator now allows higher-earning pensioners to check whether their payment will be clawed back.
Who Is Affected?
The £35,000 threshold applies to total taxable income, including state pension, private and workplace pensions, employment earnings, savings interest, dividends, rental income, and taxable state benefits. Income is assessed individually, not per household, meaning one partner may repay while the other keeps the payment.
For example, a pensioner earning £36,000 would repay the benefit, while their partner earning £22,000 would retain it, according to HMRC guidance.
How Repayment Works
Repayment occurs automatically via tax code adjustment in 2026 or through Self Assessment tax returns. A standard £200 Winter Fuel Payment could increase a tax bill by approximately £17 per month during recovery. HMRC confirmed that affected pensioners should have received notification by letter or email from April 2025.
Pensioners cannot repay the benefit as a lump sum early; instead, the amount is recovered gradually through PAYE tax code adjustments.
Opting Out
Pensioners in England, Wales, and Northern Ireland can opt out of future payments via an online form on GOV.UK. A telephone service is available for those without internet access. In Scotland, opt-out is handled by Social Security Scotland on 0800 182 2222 (8am-5pm, Monday-Friday), with details on MYGOV.SCOT.
Opting out may help avoid future tax repayments, and pensioners retain the option to rejoin the scheme if circumstances change.
Background
Winter Fuel Payments and Pension Age Winter Heating Payments are automatically issued unless pensioners actively opt out. The changes were introduced last winter. The DWP Touchbase newsletter reminded pensioners to check their status using the new HMRC calculator.
