State pensioners who earn above the £35,000 threshold will face monthly tax charges of up to £33 as HMRC reclaims winter fuel payments through adjusted tax codes.
HM Treasury has published guidance on the gov.uk website outlining the new collection system for pensioners earning above the threshold. The winter fuel payment was previously universal, but in 2024 the government restricted it to those eligible for Pension Credit, which limited it to people earning about £11,300 a year or less. That arrangement lasted only one winter before the current system was introduced.
How the repayment system works
Under the current rules, the payment is made to all pensioners as before, but HMRC reclaims the cash from those earning £35,000 or more in a given tax year. An estimated two million state pensioners are affected.
HMRC's guidance explains that unless pensioners opt out of receiving the payment, their tax code will be changed to recover the money. For the winter fuel payment made between November 2025 and January 2026, tax codes were changed from April, resulting in repayments of about £17 a month.
For those who receive payments again in the following winter, covering November 2026 to January 2027, and who did not opt out, their tax code will change to collect the payment for both tax years, worth £33 a month, from April 2027 in the 2027-28 tax year.
Official guidance and examples
HMRC's guidance states: "We'll take your payment for the 2025 to 2026 tax year by changing your tax code for the 2026 to 2027 tax year. This means you'll pay more tax each month to pay back the full payment that you received in the 2025 to 2026 tax year."
The guidance continues: "For example, for a typical payment of £200, you'll pay approximately £17 per month extra in tax. In April 2026, you'll get a letter or an email notification to tell you that we've changed your tax code to take back your Winter Fuel Payment. This will show as an underpayment. Any tax code letter or notification before this will not include this change."
It adds: "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 two 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 approximately £33 per month extra in tax in the 2027 to 2028 tax year."
Automatic collection for most
An HMRC spokesperson said: "The majority of people who need to pay back a Winter Fuel Payment will do so automatically via their tax code. For those already registered for Self Assessment, it will be collected via their tax return."
The spokesperson added: "We've provided online guidance clearly explaining how recovery of payments works, and a calculator so people can see if they'll need to pay back the payment."
