More than two million state pensioners across the UK have received a stark warning: they are set to lose their Winter Fuel Payment due to their income level.
How the New Payment Clawback Works
The Department for Work and Pensions (DWP) has confirmed that if your individual annual income exceeds £35,000, you will be required to repay the Winter Fuel Payment. The mechanism for this is straightforward but impactful. The funds will be paid to you initially, but HM Revenue & Customs (HMRC) will subsequently reclaim the money directly through the tax system.
For the majority of pensioners, this recoupment will happen automatically. Your tax code will be adjusted under the PAYE system to collect the owed amount. If you are already enrolled in self-assessment, you will need to declare the payment and the resulting liability in your annual tax return.
Household Income vs. Individual Threshold
A crucial detail of the new rule is that the £35,000 eligibility threshold is based on individual income, not total household income. This means the financial impact can vary within a single home.
For example, consider a couple where one partner earns £40,000 per year and the other earns £30,000. In this scenario, the higher earner would be required to pay back their share of the Winter Fuel Payment, while the lower earner would be entitled to keep theirs.
The standard payment is £200 for eligible households, rising to £300 for households with someone aged 80 or over. It was possible to opt out of receiving the payment, but the deadline for doing so passed on 15 September 2025.
Eligibility and Regional Changes
Your eligibility for the payment is primarily determined by your age during the qualifying week. You will not be eligible if, during that week, you were in hospital receiving free treatment for the whole period and the preceding year, or if you were in prison.
Additionally, eligibility is lost if you resided in a care home continuously from 23 June 2025 or earlier and you are claiming certain benefits like Universal Credit or Pension Credit.
It is important to note that in Scotland, the Winter Fuel Payment has been replaced entirely by the new Pension Age Winter Heating Payment, meaning these specific DWP rules do not apply there.
