State pensioners who receive a Winter Fuel Payment this year and exceed an annual income threshold may face double tax charges from HM Revenue and Customs (HMRC). Winter Fuel Payments will start being paid to pensioners born on or before June 27, 1960, from next month, with payments worth between £100 and £300.
While all pensioners born on or before this date are eligible to receive a Winter Fuel Payment, not everyone is entitled to keep it. Pensioners with a total individual annual income over £35,000 will have their Winter Fuel Payment automatically clawed back by HMRC through extra tax charges every month.
Opt-out deadline passes
The deadline to opt out of receiving a Winter Fuel Payment this year, and thereby avoid extra tax charges as it's clawed back, has now passed. Pensioners who failed to opt out in time will receive a payment from November and will later have it taken back by HMRC.
HMRC is already in the process of reclaiming Winter Fuel Payments from high-income pensioners who received a payment in winter 2025. If you haven't opted out this year, then your 2026 payment will start to be clawed back from January, essentially doubling the tax charge each month.
Monthly tax deductions explained
According to HMRC, for a typical Winter Fuel Payment of £200 in both years, pensioners will pay up to £33 extra tax every month. If you receive a £300 Winter Fuel Payment in both years, then your extra monthly tax charges will be higher.
HMRC said: "HMRC will collect two payments through your tax code at the same time. This means you will pay more tax each month.
"Example: If HMRC is already collecting your 2025 payment, your tax code will change in January 2027 to start collecting your 2026 payment. You will pay approximately £30-£33 more in tax each month if your Winter Fuel Payment is £200 in both years.
"If you do not opt out of receiving Winter Fuel Payment, HMRC will change your tax code again in April 2027 to continue collecting your 2026 payment and start collecting your 2027 payment in advance."
Future tax year changes
HMRC said the monthly tax deductions will "temporarily rise" to between £30 and £33 per month for a typical payment of £200 as it will be recovering payments for both the 2026 and 2027 winter payments in the 2027 to 2028 tax year, which effectively doubles the monthly tax charge.
The tax office added: "For the 2026 to 2027 tax year, for a typical winter payment of £200, approximately £17 per month will be deducted from a PAYE customer.
"In the tax year 2027 to 2028, deductions will temporarily rise to approximately £33 per month for a typical payment of £200. This is because HMRC will be recovering payments for both the 2026 and 2027 winter payments in the tax year 2027 to 2028.
"This supports the transition to in-year recovery of payments, in line with normal PAYE practice. From the tax 2028 to 2029 onwards, deductions will return to approximately £17 per month."
HMRC will collect payments through PAYE tax codes and deduct the amount you owe from your wages, salary, or pension each month until the debt has been fully repaid, unless you have already filed a Self Assessment tax return, in which case you'll pay it through your tax bill instead. If HMRC changes your tax code to reclaim your Winter Fuel Payment, you'll be contacted by email or post.
While pensioners can no longer opt out of the Winter Fuel Payment this year, it will be possible to opt out for next year's payment from December 21. Opting out won't affect your State Pension, and you don't need to opt out every year, as you won't receive a payment in future unless you choose to opt back in.
If you do decide to opt back in, you can do so by contacting the Winter Fuel Payment Centre. To get a payment for winter 2026 to 2027, you will need to contact the service before March 31, 2027.
