HMRC has confirmed that state pensioners with an annual income above £35,000 will face monthly tax deductions of £33 while the tax authority recovers Winter Fuel Payments through automatic tax code changes.
The clawback applies to Winter Fuel Payments of between £100 and £300 made during the 2026/2027 and 2027/2028 tax years. Pensioners who receive the standard £200 payment will see their monthly deductions continue until the full amount has been repaid.
How the recovery works
All state pensioners automatically receive Winter Fuel Payments, but if their total income exceeds £35,000, HMRC reclaims the full value through the tax system. Anyone earning £35,001 or more must repay the entire amount. The threshold is strictly based on personal income, so in a couple where one person earns £40,000 and the other £20,000, only the individual earning £40,000 will have their payment reclaimed.
Pensioners do not need to contact HMRC or transfer money manually. The department automatically adjusts the tax code, with a deduction of £17 for the typical £200 Winter Fuel Payment during the 2026/2027 tax year. This rises to £33 per month during the 2027/2028 tax year because HMRC recovers two years' worth of payments through a single adjustment.
Repayment timeline
From the 2028/2029 tax year onwards, repayments will be collected in the same tax year that the payment is received. HMRC explained: "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."
Myrtle Lloyd, HMRC's Chief Customer Officer, warned: "Criminals are great pretenders and often use fake letters, emails, calls and texts to impersonate HMRC and trick people into giving them money." She added: "I'd encourage anyone who's unsure to use our online tool at GOV.UK to check whether and how their payment will be recovered - there's no need to call us."
Opting out
State pensioners can avoid automatic tax deductions by choosing not to receive the Winter Fuel Payment. They have until 11.59pm on 20 September 2026 to make that decision.
