HMRC has confirmed that state pensioners earning just £22,453 in a single year will lose their winter fuel payment of £200. The new rules mean that those earning more than £35,000 will automatically lose the payment, as the money will be taken back through taxation.
Key Details of the New Threshold
The unpopular Pension Credit eligibility rules introduced in 2024 have been scrapped. This coming winter, the universal winter fuel payment for all state pensioners will continue as in 2025. However, the catch is that those earning over £35,000 will lose their payment.
State pension income counts towards the £35,000 threshold. For a pensioner on the full new state pension, that means they are already earning £12,547.60 a year towards the threshold, assuming a full National Insurance record.
Martin Lewis Explains the Cliff Edge
Money expert Martin Lewis has highlighted that this is a cliff-edge scheme. He stated: "If you earn £35,000 and 1p, you lose the entire £200. It is not a graduated scheme." He added that all earnings subject to Income Tax count, including private pensions, state pension, employment income, and savings interest outside of an ISA.
Benefits such as PIP, Pension Credit, and Disability Living Allowance do not count towards the threshold. However, collecting the full state pension leaves pensioners with just £22,452.40 of their £35,000 allowance. This means they cannot earn another £22,453 or more in the same tax year without losing the payment.
Impact on Pensioners
The threshold is much higher than the old Pension Credit rules, which removed the payment from those earning about £11,600 in 2024. Pensioners above the £35,000 threshold will have the amount automatically collected via PAYE or Self-Assessment. No further action is needed, and those who wish to opt out can do so.
