Thousands of state pensioners across the UK are set to have money deducted from their bank accounts from this Monday, as HMRC begins clawing back Winter Fuel Payments from those who do not qualify.
New payment system causes confusion
This year, a new and potentially confusing system has been implemented. All retirees will initially receive the payment of up to £300 into their accounts from November, with Monday, November 17 being a key payment date for many.
However, the payment will not belong to everyone. The tax authority, HMRC, will subsequently reclaim the cash from an estimated four million pensioners whose annual income exceeds £35,000, making them ineligible for the support.
How the reclaim process works
The Government confirmed this is seen as the easiest method to separate eligible and ineligible households this winter. Pensioners who are not entitled to the payment are being warned that the money arriving in their accounts is not technically theirs to keep.
If they choose to spend it, they should be aware that HMRC will be taking the amount back at a later date. In most cases, this will be done automatically through the Pay As You Earn (PAYE) system.
This is the first year these new rules are active, and officials acknowledge it may take some time for people to get used to the change.
Background and government rationale
The new plan was forced upon the Government after a disaster last year when Winter Fuel Payments were heavily restricted. This resulted in many low-income pensioners missing out on crucial support during the cost-of-living crisis.
Ministers now state they are confident they have struck the right balance between protecting the poorest pensioners and not wasting public money on the wealthiest retirees who do not need the financial help.
Winter Fuel Payments will continue to land in bank accounts throughout November and December, with the subsequent reclaims by HMRC taking place in the coming weeks.
