HM Revenue and Customs (HMRC) has confirmed extra tax charges for high income state pensioners over the next two years. The charges will apply to pensioners in the UK with an individual annual income of more than £35,000 who receive a Winter Fuel Payment.
The Department for Work and Pensions (DWP) issues payments of between £100 and £300 from November to help pensioners with heating costs during the colder months, but not all pensioners will get to keep the money. For those who exceed the £35,000 income threshold, HMRC will automatically claw these payments back in the following tax year.
How the clawback works
HMRC has confirmed that pensioners who get a Winter Fuel Payment in both the 2026 to 2027 and 2027 to 2028 tax years will have the payments taken back for these two years via a tax code change. As such, pensioners will face extra tax charges every month until the Winter Fuel Payment, which is worth up to £300, has been fully recovered.
The extra tax per month that pensioners will have to pay depends on the amount they received, but according to the tax office, for a typical Winter Fuel Payment of £200, pensioners will pay around £33 per month extra tax.
HMRC said: “If you receive payments in the 2026 to 2027 and 2027 to 2028 tax years: 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.”
Self Assessment and opting out
For pensioners in Self Assessment, HMRC will automatically include the amount of your Winter Fuel Payment on your tax return for each tax year as a tax charge if you file online. If you file a paper Self Assessment tax return, you’ll need to add the payment yourself and then pay it back through your Self Assessment tax bill in the tax year in which you receive the payment.
To avoid facing these extra tax charges, pensioners with an annual income of more than £35,000 can choose to opt out of Winter Fuel Payments. HMRC has set a deadline of 11.59pm on September 20, 2026, to do this if you opt out online, or before 6pm on September 18, 2026, if you opt out by calling the Winter Fuel Payment helpline.
Opting out won’t affect your State Pension and you don’t need to opt out every year, as you won’t receive the Winter Fuel Payment in future years unless you choose to opt back in.
UK-wide application
The automatic recovery of Winter Fuel Payments applies across the whole of the UK, including in Scotland where the payment is known as the Pension Age Winter Heating Payment and in 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 payment recovery only applies to pensioners with annual earnings of more than £35,000 who didn’t opt out of getting a Winter Fuel Payment 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.”
