HM Revenue and Customs (HMRC) has issued crucial new guidance for pensioners regarding the tax treatment of this year's Winter Fuel Payment. The update clarifies when higher-earning recipients need to declare the benefit and aims to prevent confusion ahead of the Self Assessment deadline.
Key Tax Deadline Shift for Winter Fuel Payments
The central point of the new guidance is a shift in the tax year for which the 2025 payment must be declared. HMRC has confirmed that pensioners do not need to include their 2025 Winter Fuel Payment on the tax return for the 2024 to 2025 tax year. This is because payments received in Autumn 2025 will be recovered in the following tax cycle.
Specifically, the payment will be accounted for on the 2025 to 2026 tax return. The deadline for filing this return and making any necessary repayment is 31 January 2027. This gives affected individuals additional time to prepare for any potential clawback.
Who Needs to Repay and How It Works
The repayment rule applies to pensioners whose income exceeds the £35,000 annual threshold. If you claim either the Winter Fuel Payment or the equivalent Pension Age Winter Heating Payment in Scotland and earn above this amount, HMRC will reclaim the benefit.
The recovery will be handled in one of two ways:
- Via the Self Assessment tax return process.
- Through adjustments to your PAYE (Pay As You Earn) tax code, if you are employed or receive a company pension.
For those unsure whether they will need to repay, HMRC provides an online checking tool on the GOV.UK website to help determine liability before the January 2027 deadline.
Payment Details and Eligibility
The Department for Work and Pensions (DWP) has stated that the vast majority of the 9 million eligible pensioner households should have received their lump sum for the 2025/26 period by November or December. Payments continue to be distributed, and anyone who believes they are owed money has until the end of March 2026 to lodge a claim with the DWP.
The amount received depends on several factors, including age and living circumstances during the qualifying week of 15th to 21st September 2025. The payment bands are:
- £101.70 for pensioners in residential care.
- £203.40 for those aged between 66 and 79.
- £305.10 for individuals aged 80 or above.
To qualify, individuals must have been born before 22nd September 1959 and have an annual income of £35,000 or less to retain the full payment without tax implications.
This guidance provides much-needed clarity for pensioners navigating the intersection of state benefits and the tax system, ensuring they understand their obligations and can plan their finances accordingly for the coming years.
