Update on Winter Fuel Payments recovery through the tax system

From this year, entitlement to the Winter Fuel Payment has been extended so that everyone who is at State Pension age and above is eligible. For those with a taxable income of over £35,000 and who are not in receipt of Pension Credit or certain other means-tested benefits, the full Winter Fuel Payment will have to be paid back via the income tax system.

The extension will mean that an estimated additional 7.4 million pensioners will be eligible for Winter Fuel Payments in England, Wales and Northern Ireland, and the Pension Age Winter Heating Payment in Scotland.

The change follows criticism of the government’s decision in July 2024 that future payments in England and Wales would go only to those on low incomes who received specified benefits such as pension credit.

What does this man if I have an income over £35,000?

If you have a taxable income of more than £35,000 HMRC will apply a charge to your income tax that is equal to the full value of the payment received. 

If you are a PAYE customer, the charge will be automatically collected through your tax code, unless you already file a Self Assessment tax return. This means that your winter payment will be deducted from  your income and paid to HMRC in monthly instalments across the 2026-2027 tax year, starting from April 2026. 

If you file annual Self Assessment returns, you do not need to include payments in your 2025-2026 return. Where it’s possible to do so, HMRC will automatically include the payment on this year’s tax return. You should check that your winter payment is on your online return and include it yourself if it’s not.

Further action

Please contact us if you have any questions relating to your tax position on this topic.

About the Author

Paul Newbold

Partner

After qualifying with KPMG where he gained significant audit experience, Paul joined Torgersens in 1991 and became the firm’s audit partner in 2000. Paul employs his broad range of financial skills to provide commercial and accounting advice to a range of owner-managed businesses in the independent retail, education and professional services sectors. He also has extensive experience dealing with charities, Registered Social Landlords and not-for-profit organisations and co-operatives.   Outside of work, Paul likes to visit Eastern France and South-West German and read novels by David Morrell, Michael Blake and Harper Lee. He also likes watching films, his favourite is The Shawshank Redemption.

To get in touch please e-mail paul.newbold@torgersens.com.