HMRC explains how Winter Fuel Payment will be clawed back from certain pensioners

HMRC has announced further details on how Winter Fuel Payments will be recovered from the wealthiest pensioners this year.

Winter Fuel Payment eligibility was extended to the vast majority of pensioners in June, after the government controversially means-tested the allowance in 2024, slashing the number of people able to get the support.

More than three quarters of pensioners (around nine million) will qualify for the payment this winter after the U-turn.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

However, eligible pensioners will only get the payment if they have a taxable income of or below £35,000 per year.

This includes income from a private pension and even interest on savings – so utilising tax-free savings vehicles like a cash ISA could be more important than ever.

HMRC has now launched a new calculator, allowing people to check if their income exceeds the threshold.

Users need to input their country of residence and date of birth and select the types of taxable income they receive.

They then need to enter the amount of income they get for each type and select whether they file a self assessment tax return or not.

The tool then says whether HMRC will take back the Winter Fuel Payment or not, and also explains whether this will be through their self assessment tax return or tax code.

We look at how to boost your chances of getting the Winter Fuel Payment in a separate piece.

How will HMRC claw back Winter Fuel Payments from wealthier pensioners?

Most people will get the Winter Fuel Payment automatically if they meet the eligibility rules.

However, if their income is over £35,000, the payment will be taken back by HMRC.

This will be done automatically by tax code unless you already file a self assessment tax return.

Collection by tax code

In this case, HMRC would change your tax code for the 2026/27 tax year.

For a typical Winter Fuel Payment of £200, HMRC would deduct approximately £17 per month.

However, in the 2027/28 tax year, this will rise to approximately £33 per month for a £200 Winter Fuel Payment.

This is because HMRC will collect payments from 2026 and 2027.

It will then return to around £17 per month for the 2028/29 tax year, HMRC says.

Collection by self assessment

HMRC will automatically include the Winter Fuel Payment on your 2025/26 tax return as part of your income, if you complete your self assessment tax return online each year.
Those who do a paper return will need to include the payment on their 2025/26 tax return.

Can I opt out of getting the Winter Fuel Payment?

You can opt out of getting all future Winter Fuel Payments if you don’t want to receive the allowance.

To do so, you need to contact the Winter Fuel Payment Centre before 15 September 2025.

If you change your mind, or your circumstances change, you can opt back in by contacting them again. To get the payment for this winter (2025/26), you will need to contact the Winter Fuel Payment Centre before 31 March 2026.

You can’t get a Winter Fuel Payment if you live in Scotland but you might qualify for the Pension Age Winter Heating payment.