HMRC to Reclaim Winter Fuel Payments Automatically
HMRC is issuing new tax codes to state pensioners to automatically recover winter fuel payments of up to £300 if their total income exceeded the £35,000 threshold during the winter period. The change follows the introduction of a new system that replaced the previous means-tested winter fuel payment tied to Pension Credit.
How the New System Works
Under the revised scheme, all state pensioners receive a winter fuel payment by default: £200 for those under 80, and £300 for those aged 80 or over. However, an estimated two million pensioners who earned more than £35,000 from any income sources—including work, savings, or pensions—will be required to repay the full amount.
According to HMRC guidance published on Gov.uk, the repayment will be collected automatically through adjustments to the individual's PAYE tax code for the following tax year. Pensioners who normally submit a self-assessment tax return, or are asked to do so, will repay via their return instead.
What Pensioners Need to Know
HMRC will send a letter or notification via the HMRC app informing pensioners of their new tax code. The repayment is typically spread over 12 months. For a £200 payment, the extra tax amounts to approximately £17 per month.
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.”
The guidance also notes: “You’ll need to wait for us to take back the payment, you cannot pay it sooner. We’ll take your payment for the 2025 to 2026 tax year by changing your PAYE tax code for the 2026 to 2027 tax year.”
Impact and Next Steps
Pensioners who believe they may be affected should review their total income for the 2025-26 tax year. HMRC provides an online calculator to help individuals determine if they need to repay. If the full amount cannot be collected via the tax code, HMRC will send a tax calculation to settle any outstanding balance.
