State pensioners could have up to £300 taken from their Winter Fuel Payment if their income exceeds £35,000 a year, under plans being implemented by Andy Burnham and John Healey.
From November, the payment will continue to be sent automatically to individuals aged 66 and above to help with heating costs. However, a new income threshold means those earning above £35,000 per year will no longer be eligible.
How the recovery works
Rather than stopping payments at source, the government will initially pay everyone before recovering the funds from those exceeding the threshold via the tax system. Approximately 2 million individuals are anticipated to be impacted, with the typical amount to be repaid reaching up to £300.
That sum will not be withdrawn from bank accounts. Instead, HMRC will recoup it through adjustments to tax codes, deducting roughly £33 per month from those affected.
Changes from 2027
From 2027, the procedure will alter once more. HMRC intends to collect two payments during that year, one to recover overpaid support from 2026 and another in advance for the 2027 payment, meaning some individuals could face deductions of up to £600 throughout the year.
HMRC said: "For PAYE customers, for a typical payment of £200, we'll deduct approximately £17 per month. In the 2027 to 2028 tax year, we'll deduct approximately £33 per month for a typical payment of £200.
"This is because we'll be collecting payments from 2026 and 2027. It will then return to approximately £17 per month for the 2028 to 2029 tax year.
"If you are confident that you will breach the £35,000 income threshold then you have the option to opt out of receiving the 2026 Winter Fuel Payment. Details of how to opt out can be found at gov.uk or mygov.scot from April 1, 2026. You'll also be able to do this by phone or by post."
