HMRC has confirmed that two million state pensioners will face automatic deductions from their monthly income starting in July, as the government recovers Winter Fuel Payments issued earlier. The Labour Party government is recouping the £200 or £300 allowances from pensioners who earn over £35,000 under Department for Work and Pensions (DWP) rules.
How the deduction works
HMRC stated: "For a typical Winter Fuel Payment of £200, PAYE customers with income more than £35,000 will pay approximately £17 per month extra in tax during the 2026 to 2027 tax year to recover their payment." Up to two million people across Britain could be affected by these automatic deductions, according to HMRC estimates.
Example scenario
In an illustrative example on its website, HMRC explained: "Your total income is £37,710. This is made up of £25,737 from a private pension and £11,973 from your state pension. In December, you got a £200 Winter Fuel Payment." Under this scenario, the pensioner's personal allowance of £12,570 is adjusted, resulting in a new tax code of K39. The revised code means the individual pays additional tax on £399 of income, equating to around £17 per month in extra deductions.
Reporting scams
To report a suspicious text claiming to be from HMRC, forward it to 60599. Suspicious emails should be forwarded to phishing@hmrc.gov.uk, and scam phone calls can be reported via GOV.UK. If money has been stolen, contact your bank immediately and notify Report Fraud. In Scotland, contact police on 101.
Myrtle Lloyd, HMRC’s Chief Customer Officer, said: "Criminals are great pretenders and often use fake letters, emails, calls and texts to impersonate HMRC and trick people into giving them money. I’d encourage anyone who’s unsure to use our online tool at GOV.UK to check whether and how their payment will be recovered – there’s no need to call us."
