HMRC will take Winter Fuel Payments back from high income pensioners via a tax code change (Image: Getty)
The Department for Work and Pensions (DWP) has confirmed a tax code change for state pensioners in England and Wales in April who exceed an income threshold.
The change will be made to pensioners with an income over £35,000 so that HM Revenue and Customs (HMRC) can reclaim Winter Fuel Payments. Payments between £100 and £300 were issued automatically to eligible households in November or December last year, but those with a total income above the £35,000 threshold will now see the Winter Fuel Payment taken back by HMRC. The DWP said this will be done either by changing your tax code or adding the amount to your Self Assessment tax return. This only applies to pensioners who exceed the income threshold and didn’t opt out of getting the Winter Fuel Payment in the 2025/26 tax year.
Those who didn’t opt out will receive a letter or email notification from the DWP this month confirming a tax code change to take the Winter Fuel Payment back.
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According to the DWP, for a typical Winter Fuel Payment of £200, you’ll pay around £17 per month in extra tax to pay the money back.
It means that pensioners will pay more tax each month until the full Winter Fuel Payment they received in the 2025/26 tax year is paid in full. Pensioners need to wait for HMRC to take the payment and cannot pay it any sooner.
Those who are in Self Assessment should have had the Winter Fuel Payment automatically included on their tax return for the 2025 to 2026 tax year as a tax charge.
The DWP said: “We’ll take your payment for the 2025 to 2026 tax year by changing your tax code for the 2026 to 2027 tax year. This means you’ll pay more tax each month to repay the full amount you received in the 2025 to 2026 tax year.
“In April 2026, you’ll get a letter or an email notification to tell you that we’ve changed your tax code to take back your Winter Fuel Payment. This will show as an underpayment.
“Once we’ve confirmed your income for the 2025 to 2026 tax year, we’ll check whether you still need to repay this amount. If we’re unable to collect the full amount due during the tax year, in your tax code, we’ll send you a tax calculation.”
The DWP has also now confirmed Winter Fuel Payments for the 2026/27 tax year, which will once again see pensioners with an income over £35,000 per year have their payments clawed back by HMRC.
To opt out of getting Winter Fuel Payments, you need to either complete the opt-out form before 11:59pm on September 20, 2026, or call the helpline before 6pm on September 18, 2026.
If your total income is over £35,000 and you don’t choose to opt out, HMRC will take your Winter Fuel Payment back automatically – you cannot return it yourself.
Explaining the process for the 2026 to 2027 and 2027 to 2028 tax years, the DWP added: “Unless you opt out of receiving the payment, we’ll collect your payments for the 2 tax years by changing your tax code for the 2027 to 2028 tax year.
“For example, if you receive a payment in each tax year of £200, we’ll deduct about £33 per month extra in tax in the 2027 to 2028 tax year.
“If you receive a payment for the tax year 2028 to 2029 or onwards, we’ll collect your payment by adjusting your tax code for the tax year in which you receive the payment.”