Around 3 million pensioners born before 1960 will see their monthly pension payments reduced as HMRC reclaims Winter Fuel Payments they received but are no longer entitled to. The deductions apply to households with an annual income above £35,000, the new threshold for the means-tested benefit.
How the clawback works
Pensioners who receive the Winter Fuel Payment but exceed the income threshold must repay it. HMRC collects the money by adjusting tax codes, deducting instalments from monthly pension payments. For a typical payment of £200, the deduction is approximately £17 per month during the 2026 to 2027 tax year.
From April 2027, the monthly deduction will rise to approximately £33 for the 2027 to 2028 tax year, because HMRC will be collecting payments from both 2026 and 2027. It will then return to around £17 per month for the 2028 to 2029 tax year. Older pensioners who receive a larger Winter Fuel Payment but do not qualify will face higher deductions.
Government explanation and impact
The Government explained: “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. This means we’ll change your tax code for the 2026 to 2027 tax year. For a typical payment of £200, we’ll deduct approximately £17 per month.”
Overall pension payments recently increased by hundreds of pounds under the triple lock rules, which may offset some of the impact for affected households. The changes affect pensioners born before 1960, and the deductions are part of a broader system of HMRC recovering overpaid benefits.
