HMRC is set to issue extra tax charges to 900,000 state pensioners who are in Self Assessment, as part of the Winter Fuel Payment clawback measure. The clawback will affect recipients whose total income exceeds the £35,000 threshold.
How the clawback will work for 900,000 pensioners
For the 900,000 individuals in Self Assessment — including around 800,000 who also have PAYE income — the repayment of the £300 or £200 Winter Fuel Payment will be made through their Self Assessment return. Where possible, HMRC will pre-populate the tax charge figure onto online Self Assessment returns, the Labour Party government's tax arm has said. State pensioners affected face extra tax charges of around £17 a month.
For approximately 100,000 self-employed individuals who receive winter payments and have total income above the threshold, particularly those operating as sole traders, they will need to familiarise themselves with the winter payment tax charge and ensure it is correctly reported in their tax return, HMRC guidance states.
HMRC guidance and administrative impact
The advice from the tax department on its website says: "Some may seek professional advice to support accurate reporting." It adds: "These measures are not expected to impact on family formation, stability, or breakdown." HMRC also states: "These measures are not expected to have an impact on PAYE individual's experience of dealing with HMRC as the changes do not change any processes or tax admin obligations."
HMRC adds: "For self-employed individuals, the need to assess liability and report the charge through Self Assessment or Making Tax Digital may increase their administrative burden." It goes on: "While the systems are familiar, this is a new reporting obligation that could affect their experience of dealing with HMRC."
Support for affected individuals
To support affected individuals, HMRC will provide updated guidance and communications to help them understand the charge and meet their obligations confidently. HMRC will also pre-populate online Self Assessment returns with the charge to reduce manual entry and improve ease of compliance for digital customers.
