HMRC is sending new tax codes to state pensioners to recover winter fuel payments from those who exceeded the £35,000 earnings threshold, following the end of the qualifying week. The recovery process applies to payments made under the new system, which replaced the previous Pension Credit-linked arrangement.
New payment system and thresholds
Under the revised scheme, winter fuel payments of £200 to £300 are made to all state pensioners, but an estimated two million who earned more than £35,000 from any income sources—including work or savings—will have to pay the money back. State pensioners aged under 80 receive £200, while those aged 80 or over receive £300 by default.
The qualifying week for the winter fuel payment was September 21 to 27, 2026, which is the period used to assess eligibility. Pensioners who miss the deadline to surrender their payment will need to receive it and then return it to HMRC after October.
How repayment works
Those who earned above the threshold and do not normally submit a self-assessment tax return—or have not been asked to by HMRC—will have the money recovered through a change to their tax code. HMRC will adjust the tax code and send a letter informing pensioners of the change, with the payment recovered from their income each month.
According to HMRC guidance published on Gov.uk: “You’ll need to wait for us to take back the payment, you cannot pay it sooner. We’ll take your payment for the 2025 to 2026 tax year by changing your PAYE 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. For example, for a typical payment of £200, you’ll pay approximately £17 per month extra in tax. You’ll get a letter or a notification in the HMRC app to tell you that we’ve changed your PAYE tax code. We’ll review all of the tax you paid against the tax you were due to pay. If we have been unable to collect the full amount due during the tax year, in your tax code, we’ll send you a tax calculation.”
Surrender deadline and official statement
Pensioners who wish to surrender their payment must inform the Winter Fuel Payment service before the qualifying week dates. 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. 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.”
