Pensioners across the UK could see their benefits drop by £17 a month due to new changes at the Department for Work and Pensions (DWP). The DWP has explained how the new rules around Winter Fuel Allowance will work and who will be affected.
Brits who were handed Winter Fuel Payments before Christmas, but whose incomes were too high to qualify, will have to give the money back. These were people with incomes above £35,000. The money will be recovered in instalments through changes to tax codes, with a small chunk of pension payments diverted to the taxman. For under-80s who get £200 Winter Fuel Payments, HMRC will be deducting £17 a month. This will happen automatically through tax codes, unless people already file self-assessments. Those not eligible for the allowance include those living outside of England and Wales, were in hospital getting free treatment for the whole of the week of September 15-21 2025 and the year before that, need permission to enter the UK and your granted leave says that you cannot claim public funds, or were in prison for the whole of the week of September 15-21 2025.
These new rules have been set out by Chancellor Rachel Reeves, in line with the Government’s objective of targeting support at those who need it the most without requiring means-testing of the payment.
The £35,000 threshold is broadly in line with average earnings and well above the income level of pensioners in poverty, balancing support for pensioners with fairness to the taxpayer.
Winter Fuel Payments were previously universal for all pensioners but are now income-based. The Government says: “If your total income is over £35,000, you’ll need to pay back the payment. HMRC will automatically collect the payment through your tax code unless you already file self-assessment tax returns.
“This means we’ll change your tax code for the 2026 to 2027 tax year. For a typical £200 payment, we’ll deduct approximately £17 per month. In the 2027 to 2028 tax year, we’ll deduct approximately £33 per month from a typical £200 payment.
“This is because we’ll be collecting your payments from 2026 and 2027. It will then return to approximately £17 per month for the 2028 to 2029 tax year.
“If you file your self-assessment tax return online each year, HMRC will automatically include the payment on your 2025 to 2026 tax return as part of your income.”
Those in Northern Ireland may be eligible for a Winter Fuel Payment from the Northern Ireland Executive, subject to the same eligibility rules as England and Wales. Those in Scotland might be eligible for the Pension Age Winter Heating payment.
Also on offer is the Cold Weather Payment – if you get certain benefits and the temperature drops to 0C or below for seven days in a row, the Warm Home Discount – a £150 discount on your bills if you get Pension Credit or live in a low-income household, or help from the Household Support Fund – if you’re eligible under your local council’s rules.