Thousands of pensioners throughout the UK will have their payments clawed back starting in 2026, as HM Revenue and Customs (HMRC) starts to recover Winter Fuel Payments from pensioners earning above a certain amount. The change follows the government resuming the pension payment for millions of pensioners but imposing a new earnings threshold on some, which means they have to pay the money back.
The new regulations could require pensioners in England and Wales and Northern Ireland, who have been receiving the Winter Fuel Payment this winter, to repay the benefit if they earn over £35,000 a year. The repayment will be automatic via the tax system and could mean that many older people will see the money deducted from their income in the 2026-27 financial year.
The Winter Fuel Payment is a benefit provided to pensioners who have heating bills that helps them keep warm in the cold winter months and is usually worth £200-£300, depending on their age and household circumstances. All pensioners claiming a payment will be paid in the first instance, but HMRC will be taking the payment back from those with income over the threshold. Importantly, the £35,000 limit is not on family income but on the individual’s income.
HMRC will seek to recover the tax through a change in tax code for pensioners who pay tax via PAYE. This typically will result in a slightly larger repayment amount spread out over the course of the year in monthly increments. If a citizen is retiring and paying off a typical £200 monthly payment, they would likely have about £17 subtracted from their monthly income. Those pensioners who fill out a Self Assessment tax return will pay the amount back in their annual tax return, which is due to be paid by January 2027.
Over two million pensioners are likely to be impacted by the clawback, according to government figures. HMRC has apparently started to send letters, emails and texts to eligible individuals, letting them know how the process will be handled and if their tax code will be changed. The officials have also reminded pensioners to be alert to scams, noting that the government or reputable companies will not request bank information or payment by SMS.
The clawback policy has come in the wake of political discussion over winter support for pensioners following eligibility limitations for pensioners. Those who advocate the new method say it will ensure that those who truly need assistance receive it, and that those earning more than they need do not receive it. But the “all-or-nothing” repayment approach may unfairly punish pensioners whose incomes are just above the limit.
Those who anticipate higher incomes in the coming winters will be able to waive the payment and not need to pay it back later in the tax system. If you are receiving payments in October and December, you should also review eligibility and income projections before you receive the payments, HMRC advises.
For more details about your eligibility for the Winter Fuel Payment, be sure to check the website of the UK government, which offers a detailed breakdown of the amounts.
