HMRC Implements Tax Code Changes for State Pensioners to Recover Winter Fuel Allowance
HM Revenue and Customs (HMRC) has confirmed that state pensioners born before 1960 are receiving notifications about adjustments to their tax codes. This measure is designed to reclaim the Winter Fuel Allowance from individuals whose annual income exceeds the £35,000 threshold.
Automatic Deductions for High-Income Pensioners
If you received a Winter Fuel Payment of up to £300 from the Department for Work and Pensions (DWP) at the end of last year and your annual income surpasses £35,000, HMRC will contact you via letter, text, or email regarding a tax code modification. The repayment will be collected as additional tax alongside regular Income Tax payments throughout the 2026/27 tax year.
Money Saving Expert, founded by BBC and ITV personality Martin Lewis, clarified the process: "This will be done through a change in your tax code for 2026/27 – it's this change that HMRC is contacting people about."
Monthly Deductions and Opt-Out Options
HMRC elaborated on the mechanism: "HMRC will automatically collect the payment through a change to the customer’s tax code from April 2026, unless they already file a Self Assessment tax return. This means we’ll change the customer’s tax code for the 2026 to 2027 tax year. For a typical payment of £200, we’ll deduct approximately £17 per month."
Affected individuals are not required to take any action or contact HMRC directly. However, those who anticipate their total individual income—including private pensions, state pensions, and other sources—exceeding £35,000 can opt out of future Winter Fuel Payments to avoid reclaims.
Household Income Considerations and Regional Procedures
HMRC emphasized that income assessments are conducted on an individual basis within households. For instance, if Person A earns £36,000 and Person B earns £22,000, HMRC will reclaim the payment from Person A only, while Person B retains their allowance.
Residents in England, Wales, and Northern Ireland can opt out of receiving future Winter Fuel Payments through the DWP’s online form on GOV.UK, available from 1 April 2026. This proactive step allows eligible pensioners to manage their finances without facing unexpected deductions.
