The Department for Work and Pensions (DWP) has announced new rules that will see some state pension payments reduced by £17 a month. This change is linked to the Winter Fuel Payment scheme, where money will be diverted from pension payments to HM Revenue and Customs (HMRC).
Who is affected?
Pensioners aged over 65 who received the Winter Fuel Payment but are no longer eligible under updated criteria will have the money clawed back. Those with an annual income above £35,000 are considered financially comfortable enough to forgo the allowance and must repay it.
Initially, all seniors were paid the cash, but under the latest rules, not everyone qualifies. HMRC will recover the amount in instalments through changes to tax codes, deducting money from state pension payments each month.
How much will be deducted?
For pensioners under 80 who received a £200 Winter Fuel Payment, HMRC will take back approximately £17 per month. The process will be automatic via tax codes, unless individuals already file self-assessment tax returns.
The government confirmed the new rules, stating: "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."
For the 2026 to 2027 tax year, a typical deduction of £17 per month will apply. In the 2027 to 2028 tax year, the deduction will increase to approximately £33 per month, as it will cover repayments from both 2026 and 2027. It will then return to £17 per month for the 2028 to 2029 tax year.
Those who file self-assessment tax returns online will have the payment automatically included as income on their 2025 to 2026 return.
