HMRC outlines the process of recovering Winter Fuel Payments from qualifying pensioners
The Winter Fuel Payment for the 2025/26 season is approaching, and it's crucial for taxpayers to be aware of the eligibility criteria, the recovery process for higher-income pensioners, and the deadline for claiming the payment.
For those eligible, the Winter Fuel Payment offers a financial boost of up to £300 to help cover heating costs during the colder months. However, it's important to note that higher-income pensioners may have their payments recovered by HMRC through their PAYE tax code or self-assessment tax return if their total income exceeds £35,000.
To determine if your income falls within this bracket, HMRC has launched a new calculator to help you check your eligibility. The tool requires you to input your country of residence, date of birth, types of taxable income, amounts for each type, and whether you file a self-assessment tax return. The calculator will then indicate whether your Winter Fuel Payment will be recovered and explain the method of recovery (self-assessment tax return or tax code).
If your income is below the threshold and you are paid via PAYE, you don't need to take any action to receive the payment. However, if you complete a self-assessment tax return, HMRC will automatically include the Winter Fuel Payment on your 2025/26 tax return as part of your income.
For those who file a paper return, you'll need to include the payment on your 2025/26 tax return. It's essential to remember that the deadline for claiming the payment is 31 March 2026.
If your income exceeds £35,000, HMRC will deduct the Winter Fuel Payment from your taxable income through a tax code. For a typical Winter Fuel Payment of £200, HMRC will deduct approximately £17 per month.
It's worth noting that the method of recovery for the Winter Fuel Payment will remain the same for the 2026/27 tax year, with the monthly deduction rising to approximately £33. However, by the 2028/29 tax year, the monthly deduction will return to around £17 per month, according to HMRC.
For those living in Scotland, the Winter Fuel Payment is not available, but they might qualify for the Pension Age Winter Heating payment instead.
Lastly, for eligible pensioners who wish to opt-out of receiving future Winter Fuel Payments, they can do so by contacting the Winter Fuel Payment Centre before 15 September 2025.
Utilising tax-free savings vehicles like a cash ISA could be more important than ever for eligible pensioners, as the Winter Fuel Payment might be subject to recovery if income exceeds the threshold. To boost your chances of getting the Winter Fuel Payment, a separate piece is available to help guide you through the eligibility criteria and application process.
[1] HMRC (2022). Winter Fuel Payment. Retrieved from https://www.gov.uk/winter-fuel-payment [3] HMRC (2022). How HMRC recovers Winter Fuel Payments. Retrieved from https://www.gov.uk/government/publications/how-hmrc-recovers-winter-fuel-payments/how-hmrc-recovers-winter-fuel-payments [5] HMRC (2022). Winter Fuel Payment: opting out. Retrieved from https://www.gov.uk/government/publications/winter-fuel-payment-opt-out/winter-fuel-payment-opt-out
- Subscribing to a personal finance newsletter can provide valuable information about the Winter Fuel Payment, the eligibility criteria, and the recovery process for higher-income pensioners, further aiding in personal financial management during the 2025/26 season.
- For those who have taken advantage of a cash ISA as a tax-free savings vehicle, understanding the potential recovery of Winter Fuel Payments based on income levels can help in managing personal finances more effectively, as the cash ISA might offer an alternative source of funds during the colder months if the Winter Fuel Payment is subject to recovery.
- Recipients of the Winter Fuel Payment who find themselves subject to a higher income bracket can mitigate potential issues with their business cash flow by factoring in the recovery process and planned reductions in monthly deductions in the upcoming tax years, ensuring financial stability for their personal and professional endeavors.
