Up to two million pensioners could face an unexpected £300 tax bill as HMRC moves to reclaim Winter Fuel Payments from higher earners. From November, the £200–£300 payment will still be made automatically to everyone aged 66 and over, but those earning more than £35,000 a year will no longer be eligible. The Treasury will pay everyone first and then claw back the money through the tax system.
HMRC confirmed that repayments will not be taken directly from bank accounts, easing fears of sudden deductions. Dan Whitworth, financial journalist for BBC Radio 4’s Money Box, said: “That money will not be taken from bank accounts. Instead, HMRC will reclaim it through tax.” The clawback will happen automatically via the PAYE system, with small deductions from pension or salary payments between April 2026 and April 2027.
Those who complete Self Assessment tax returns will see the repayment added to their 2025–26 tax bill, due by January 31, 2027. Paper filers must include the payment by October 31, 2026. An HMRC spokesperson said: “The vast 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.”
Mr Whitworth added that the system would change again in 2027, with HMRC planning to collect two payments that year – one to recover overpaid support from 2026 and another in advance for 2027. This could mean deductions of up to £600 across the year. He said: “The government says this approach helps avoid delays in recouping overpayments and ensures the system stays up to date.”
Those expecting to breach the £35,000 threshold can opt out of receiving the 2026 payment altogether. Applications to decline the payment open on April 1, 2026, via gov.uk or mygov.scot. Around 7.4 million pensioners will continue to receive the payment under the revised scheme, after Labour partially reversed an earlier plan to restrict it only to those on pension credit or other low-income benefits.
