Rachel Reeves has confirmed that some state pensioners will lose up to £33 a month as part of new rules implemented before she steps down as Chancellor. The changes, enforced by HMRC, will affect over-65s with annual incomes exceeding £35,000.
Who Is Affected and How?
Under the updated system, all pensioners initially receive the Winter Fuel Payment, worth either £200 or £300. However, HMRC will then reclaim the money from those deemed to have incomes too high, deducting it in monthly instalments through tax codes.
For a typical £200 payment, deductions will be approximately £17 per month in the 2026/27 tax year, rising to £33 per month in 2027/28. This is because HMRC will collect payments from both 2026 and 2027 simultaneously. The deduction will then return to around £17 per month for the 2028/29 tax year.
Government Explanation
The Government stated: "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 those who file self-assessment tax returns online, HMRC will automatically include the payment on the 2025/26 tax return as part of their income.
Impact on Pensioners
These deductions mean pensioners may see their monthly payments reduced without prior notice. The rule change is part of broader adjustments to Winter Fuel Payments, which previously were not subject to income-based clawbacks.
