Some over-65s will see their monthly pension payments cut this year under new rules confirmed by Rachel Reeves. The reduction, amounting to approximately £17 per month, applies to pensioners with annual incomes exceeding £35,000.
Winter Fuel Payment Changes
The winter fuel allowance, worth up to £300 and paid in November, is now linked to income. All pensioners initially receive the payment, but wealthier over-65s must repay it through monthly deductions from their state pension.
For those receiving the standard £200 Winter Fuel Payment, the monthly cut is £17. This process is designed to separate eligible recipients from those who are not.
How HMRC Collects the Payment
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."
This means tax codes will be adjusted for the 2026-2027 tax year. For a typical £200 payment, approximately £17 will be deducted monthly. In the 2027-2028 tax year, deductions will rise to about £33 per month to cover both the 2026 and 2027 payments, before returning to £17 monthly from 2028-2029 onward.
For those who file self-assessment tax returns online, HMRC will automatically include the payment as income on their 2025-2026 return.
Background
The new qualifying rules, announced by Rachel Reeves and the Government last year, followed controversy over cuts to the support. Previously universal for all pensioners, the Winter Fuel Payment now only goes to those with annual incomes below £35,000. This comes despite the state pension recently increasing by up to £575 under the triple lock.
