The Department for Work and Pensions (DWP) has issued a reminder that Winter Fuel Payments and Pension Age Winter Heating Payments will be automatically issued to eligible pensioners unless they actively opt out. The reminder, published in the DWP Touchbase newsletter, highlights that higher-earning pensioners may have the payment clawed back through taxation.
Under revised arrangements introduced last winter, HMRC will reclaim the payment from pensioners whose total individual income exceeds £35,000. The threshold applies to total taxable income, including state pension, private pensions, employment earnings, and investment income. Recovery will occur either through an automatic tax code adjustment in 2026 or via Self Assessment tax returns.
HMRC has launched an online calculator to help pensioners estimate their income and determine if repayment is likely. Income is assessed on an individual basis, meaning one partner in a couple may have to repay while the other retains the payment. For example, a pensioner earning £36,000 would repay, while their partner earning £22,000 would keep the benefit.
Pensioners across the UK who expect income above £35,000 can opt out of future payments entirely using an online form on GOV.UK or by phone. Scottish pensioners can call Social Security Scotland on 0800 182 2222. Opting out may help avoid later tax recovery, and individuals can rejoin the scheme if their circumstances change.
HMRC confirmed that early lump-sum repayment is not possible; instead, recovery is typically through PAYE tax code adjustments. A standard £200 payment could raise a tax bill by about £17 per month. Those affected should have received notification by letter or email from April this year. Self Assessment filers will see the recovery included in their annual tax bill.
