HMRC will automatically recover Winter Fuel Payments from state pensioners whose total individual annual income exceeds £35,000, by adjusting their tax codes and deducting extra tax from wages, salary or pension until the amount is repaid.
Winter Fuel Payments, worth between £100 and £300, will begin being paid to pensioners in England, Wales and Northern Ireland born on or before June 27, 1960, from mid-November. Those in Scotland who have reached State Pension age will receive a Pension Age Winter Heating Payment instead. The payments are intended to help pensioner households with heating bills over the winter, but not every recipient is eligible to keep the full amount.
How the clawback works
Pensioners with a total individual annual income over £35,000 will have their Winter Fuel Payment automatically clawed back by HMRC. The tax authority will usually collect the amount owed by changing the tax code, meaning extra tax is deducted from wages, salary or pension until the payment has been fully repaid. Those who complete a Self Assessment tax return will pay through their tax bill instead.
According to HMRC, a typical Winter Fuel Payment is £200, which would result in additional tax charges of around £17 per month. If pensioners receive a payment of this amount in both the 2026 to 2027 and 2027 to 2028 tax years, HMRC will deduct around £33 per month extra in tax in the 2027 to 2028 tax year. A £300 payment would result in higher monthly charges.
HMRC statement on deductions
HMRC said: “HMRC will automatically collect the payment for pensioners with total income over £35,000 through PAYE tax codes unless they already file a Self Assessment tax return. Following announcements by the Scottish Government and Northern Ireland Executive, this tax charge will apply UK wide.”
“For the 2026 to 2027 tax year, for a typical winter payment of £200, approximately £17 per month will be deducted from a PAYE customer.”
“In the tax year 2027 to 2028, deductions will temporarily rise to approximately £33 per month for a typical payment of £200. This is because HMRC will be recovering payments for both the 2026 and 2027 winter payments in the tax year 2027 to 2028.”
“This supports the transition to in-year recovery of payments, in line with normal PAYE practice. From the tax 2028 to 2029 onwards, deductions will return to approximately £17 per month.”
Opting out and next steps
If HMRC changes a tax code to reclaim the payment, the pensioner will be contacted by email or post, and the tax deducted from wages, salary or pension will increase. While pensioners can no longer opt out of the Winter Fuel Payment this year, it will be possible to opt out for next year’s payment from December 21.
Opting out will not affect the State Pension, and opting out does not need to be repeated every year, as no payment will be received in future unless the pensioner chooses to opt back in. To opt back in, pensioners can contact the Winter Fuel Payment Centre, and to receive a payment for winter 2026 to 2027, they must contact the service before March 31, 2027.
