HMRC will take monthly payments from pensioners via a tax code change (Image: Getty)
State pensioners with an income of more than £35,000 face being hit with extra tax charges of around £17 every month from HM Revenue and Customs (HMRC).
The extra monthly charges are to repay Winter Fuel Payments issued in winter 2025 to 2026 to pensioner households with an annual income exceeding £35,000. Those with a personal income above this threshold who received a Winter Fuel Payment last year now face having this payment clawed back through extra tax charges every month in the current tax year by HMRC until it has been repaid in full. Winter Fuel Payments are worth between £100 and £300, with the amount pensioners are awarded being based on when they were born and their individual circumstances.
HMRC has confirmed that the process of reclaiming Winter Fuel Payments from high income pensioners will be done automatically via a change in tax code for the 2026 to 2027 tax year and will affect almost two million households.
For pensioners in Self Assessment who file online, the payment should instead be pre-populated in their 2025 to 2026 tax return, due by January 31, 2027.
Pensioners should check that the payment is there, and in cases where it’s not shown, it should be added manually. Those who file paper returns must add it to their tax return by October 31, 2026.
According to HMRC, pensioners with an income above the £35,000 threshold who received a typical Winter Fuel Payment of £200 last winter will pay around £17 extra per month in tax in this tax year until the full amount has been repaid.
HMRC said: “For a typical Winter Fuel Payment of £200, PAYE customers with income more than £35,000 will pay approximately £17 per month extra in tax during the 2026 to 2027 tax year to recover their payment.”
The extra tax charges began in April 2026, and households should have received a letter or email from HMRC confirming the change to their tax code to reclaim the Winter Fuel Payment.
It means that pensioners will pay more tax every 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 back the payment and cannot pay it any sooner as a lump sum.
Explaining how the tax code change will work for basic rate taxpayers, HMRC added: “Your total income is £37,710. This is made up of £25,737 from a private pension and £11,973 from your State Pension. In December, you got a £200 Winter Fuel Payment. Your Personal Allowance is £12,570. We’ll reduce your tax-free amount by:
- £11,973 (your State Pension)
- 1,000 (1,000 × 20% = the £200 Winter Fuel Payment you need to repay)
“This is your total deductions. £12,570 (Personal Allowance) – £12,973 (total deductions) = –£403 of tax free allowance. Your new tax code is K39. This means you’ll pay extra tax on £399 of income. You’ll pay around £17 more tax per month.”
The automatic recovery of Winter Fuel Payments for those with an annual income exceeding £35,000 applies across the whole of the UK, including in Scotland, where the payment is known as the Pension Age Winter Heating Payment and in Northern Ireland, where payments were made by the Department for Work and Pensions (DWP) on behalf of the Northern Ireland Executive. In all cases, recovery is handled by HMRC.
The payment recovery only applies to pensioners who exceed the income threshold and didn’t opt out of getting the Winter Fuel Payment last year.
With the recovery of payments now underway, HMRC warned pensioners to be on “high alert” for scams and said it will never contact people by text or email to ask them to repay their Winter Fuel Payments, or to request bank details.
Myrtle Lloyd, HMRC’s Chief Customer Officer, said: “Criminals are great pretenders and often use fake letters, emails, calls and texts to impersonate HMRC and trick people into giving them money.
“I’d encourage anyone who’s unsure to use our online tool at GOV.UK to check whether and how their payment will be recovered – there’s no need to call us.”