Andy Burnham and John Healey are poised to recover £300 from state pensioners who receive the Winter Fuel Payment – if their income exceeds £35,000. State pensioners earning above £35,000 annually will have approximately £33 deducted from their monthly tax payments as HM Revenue and Customs (HMRC) recovers Winter Fuel Payments through adjustments to their tax codes.
The recovery mechanism was previously announced by former Labour Party Chancellor Rachel Reeves. However, now he is in No 11, it will fall to the new Chancellor to implement it. From November onwards, the payment will continue to be sent automatically to individuals aged 66 and above to assist with heating expenses. The key change is the introduction of a new income threshold. Those earning above £35,000 per year will no longer be eligible.
Rather than stopping payments at source, the government will initially pay everyone before recovering the funds from those exceeding the threshold via the tax system.
Approximately 2 million individuals are anticipated to be impacted, with the typical amount to be repaid reaching up to £300. That sum will not be withdrawn from bank accounts. Instead, HMRC will recoup it through taxation.
From 2027, the procedure will alter once more. HMRC intends to collect two payments during that year, one to recover overpaid support from 2026 and another in advance for the 2027 payment, meaning some individuals could face deductions of up to £600 throughout the year.
HMRC said: “For PAYE customers, for a typical payment of £200, we’ll deduct approximately £17 per month. In the 2027 to 2028 tax year, we’ll deduct approximately £33 per month for a typical payment of £200.
“This is because we’ll be collecting payments from 2026 and 2027. It will then return to approximately £17 per month for the 2028 to 2029 tax year.
“If you are confident that you will breach the £35,000 income threshold then you have the option to opt out of receiving the 2026 Winter Fuel Payment. Details of how to opt out can be found at gov.uk or mygov.scot from April 1, 2026. You’ll also be able to do this by phone or by post.”