HMRC is set to claw back the Winter Fuel Payment from Department for Work and Pensions (DWP) state pensioners if they earn more than £35,000. The tax authority will increase a £17 tax charge for state pensioners who receive the Winter Fuel Allowance to £33 from 2027, it has warned.
HMRC will recover the payment by adjusting your tax code, meaning you will pay more tax each month to repay the full amount you received in the 2025 to 2026 tax year. On its website, HMRC provides an example: "For example, for a typical payment of £200, you'll pay about £17 per month extra in tax." In April 2026, you will receive a letter or email notification informing you that the taxman has changed your tax code to reclaim your Winter Fuel Payment.
If you receive payments in the 2026 to 2027 and 2027 to 2028 tax years, unless you opt out of receiving the payment, HMRC will again collect your payments for those two tax years by changing your tax code for the 2027 to 2028 tax year. The authority gives another example: "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, HMRC will collect your payment by adjusting your tax code for the tax year in which you receive the payment, it states. If you know your income for the 2026/27 tax year will remain above the £35,000 threshold, you can choose to opt out of receiving the Winter Fuel Payment next winter. Opting out means you will not need to have the payment clawed back by HMRC later, since you will not receive it in the first place, as noted by Martin Lewis.
