State pensioners who break an HMRC rule face losing around £33 extra per month in tax under new Prime Minister Andy Burnham. The extra charges will affect pensioners receiving a Winter Fuel Payment from the Department for Work and Pensions (DWP) in the 2026 to 2027 and 2027 to 2028 tax years, provided their annual income exceeds £35,000.
Pensioners above this income threshold will have the money clawed back by HMRC via a tax code change, meaning they will pay extra tax every month until the payment is fully repaid.
Winter Fuel Payment Recovery
Mr Burnham inherits the current Winter Fuel Payment system from predecessors Sir Keir Starmer and ex-Chancellor Rachel Reeves. Having vowed to lead a 'cost of living government', it is unlikely these payments will undergo a major overhaul. Any changes would not be announced until the autumn Budget on October 28, so pensioners can expect payments to proceed as planned this winter.
Winter Fuel Payments are worth between £100 and £300 per month, so the extra tax high-income pensioners pay will depend on the amount received from the DWP.
HMRC Confirms Tax Code Adjustments
According to HMRC, for a typical Winter Fuel Payment of £200, pensioners exceeding the £35,000 income threshold will be charged around £33 extra tax per month in the 2027 to 2028 tax year to repay it. This process will be carried out automatically via a change in tax code.
Confirming the extra charges for payments in the 2026 to 2027 and 2027 to 2028 tax years, HMRC said: “Unless you opt out of receiving the payment, we’ll collect your payments for the 2 tax years by changing your tax code for the 2027 to 2028 tax year.”
“For example, if you receive a payment in each tax year of £200, we’ll deduct about £33 each month extra in tax in the 2027 to 2028 tax year. If you receive a payment for the tax year 2028 to 2029 or onwards, we’ll collect your payment by adjusting your tax code for the tax year in which you receive the payment.”
Opt-Out Deadline
To avoid the extra monthly tax, pensioners with an annual income above £35,000 can opt out of Winter Fuel Payments. HMRC has set a deadline of 11.59pm on September 20, 2026, for online opt-outs, or before 6pm on September 18, 2026, if calling the Winter Fuel Payment helpline. Opting out won't affect State Pension, and you don't need to opt out every year—you won't receive the payment in future years unless you choose to opt back in.
The automatic recovery applies across the UK, including Scotland (where the payment is known as the Pension Age Winter Heating Payment) and Northern Ireland (where payments are made by the DWP on behalf of the Northern Ireland Executive). In all cases, recovery is handled by HMRC.
The recovery only applies to pensioners with annual earnings over £35,000 who didn't opt out by the September deadline. HMRC said: “You can choose to opt out of receiving the Winter Fuel Payment. If you do not opt out and your total income is over £35,000, you will receive the Winter Fuel Payment but HMRC will take it back. You cannot return it yourself.”
