State pensioners in the UK are set to see monthly deductions of up to £33 from their payments under new rules introduced by Prime Minister Andy Burnham. The changes, initially implemented by former Chancellor Rachel Reeves, mean that Winter Fuel Payments are no longer universal for all retirees.
Who Is Affected?
Over-65s with an annual income exceeding £35,000 will be impacted. While everyone initially receives the Winter Fuel Payment, HMRC will reclaim the money from those who do not qualify through adjustments to their tax code. The Government confirmed that for those receiving a £200 payment, deductions will be approximately £17 per month in the 2026/27 tax year, rising to £33 per month in 2027/28.
How the Deductions Work
The Winter Fuel Allowance is worth either £200 or £300 depending on age. 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."
In the 2027 to 2028 tax year, deductions will increase to approximately £33 per month for a typical £200 payment, as HMRC collects payments from both 2026 and 2027. It will then return to approximately £17 per month for the 2028 to 2029 tax year.
Impact on Pensioners
The changes mean that pensioners may see their monthly state pension payments reduced without warning, as the deductions are applied automatically. The Government advises affected individuals to check their tax codes and budget accordingly. The policy shift marks a significant departure from the previous universal entitlement, targeting support only to those with lower incomes.
