Thousands of state pensioners will face an extra £17 per month in tax charges from HMRC starting in April, as the tax authority reclaims winter fuel payments from those earning above the £35,000 threshold. HM Treasury has published guidance on gov.uk detailing the new system, which affects an estimated two million pensioners.
How the Repayment System Works
Under the current rules, winter fuel payments are made universally to all state pensioners, but HMRC recovers the money from those whose total income exceeds £35,000 in a tax year. Pensioners can opt out of receiving the payment to avoid repayment, but otherwise, HMRC adjusts their tax code to claw back the amount.
For the winter fuel payment made between November 2025 and January 2026, tax codes will change from April 2026, resulting in an extra £17 per month in tax. This recovers the full payment, typically £200, over the course of the tax year.
Impact on Future Payments
If a pensioner continues to receive winter fuel payments without opting out, HMRC will collect repayments for two tax years simultaneously from April 2027. For example, someone receiving £200 in both 2025-2026 and 2026-2027 will see their monthly tax increase by approximately £33 per month in the 2027-2028 tax year.
HMRC’s guidance states: “We’ll take your payment for the 2025 to 2026 tax year by changing your tax code for the 2026 to 2027 tax year. This means you’ll pay more tax each month to pay back the full payment that you received in the 2025 to 2026 tax year. For example, for a typical payment of £200, you’ll pay approximately £17 per month extra in tax.”
Notification and Self Assessment
Affected pensioners will receive a letter or email notification in April 2026 informing them of the tax code change, which will show as an underpayment. HMRC emphasizes that no prior notifications will include this adjustment. For those already registered for Self Assessment, the repayment will be collected via their tax return instead of a tax code change.
An HMRC spokesperson said: “The majority of people who need to pay back a Winter Fuel Payment will do so automatically via their tax code. For those already registered for Self Assessment, it will be collected via their tax return. We’ve provided online guidance clearly explaining how recovery of payments works, and a calculator so people can see if they’ll need to pay back the payment.”
