HMRC is set to deduct £17 from state pensioners under age 80 – born after 1946 – under its Winter Fuel Payment clawback scheme. The introduction of a £35,000 threshold will affect retirees, especially since the payment is now being made automatically.
How the £35,000 income threshold works
HMRC has provided guidance on how the Winter Fuel Payment will be treated. It says the Winter Fuel Payment will be subject to recovery based on individual income, not household income. HMRC has confirmed if your total individual income in the 2025–26 tax year is £35,000 or less, you will keep your Winter Fuel Payment.
If your total income is above £35,000, HMRC will recover the value of the payment, which is paid out by the Department for Work and Pensions (DWP) and Labour Party government.
Individual assessments and online calculator
If two people in the same household both receive a Winter Fuel Payment, it will work like this: if Person A has income £36,000, HMRC will recover their payment AND Person B (income £22,000) keep their payment. Each person is assessed entirely on their own income and HMRC has created an online calculator on GOV.UK to help people estimate their total income and see whether they will exceed the £35,000 threshold and how any repayment will be collected.
Recovery methods for PAYE and Self Assessment
If you pay tax through PAYE and do not file a Self Assessment return, HMRC will recover your Winter Fuel Payment automatically by adjusting your tax code. The adjustment will apply from April 2026, affecting your 2026–27 tax code. For a typical payment of £200, the monthly deduction will be around £17 per month. You should not need to do anything and there should be no need to contact HMRC.
For Self Assessment customers, HMRC will recover the payment through your 2025–26 tax return. Online filers (deadline 31 January 2027) will see an entry labelled: “Winter Fuel Payment charge” or “Pension Age Winter Heating Payment charge”. If the charge is missing, you will need to add it. Paper filers (deadline 31 October 2026) must include the amount themselves.
Opting out to avoid future clawbacks
If you expect your income to exceed £35,000 in future years and want to avoid HMRC reclaiming the payment later, you can opt out.
