HMRC has confirmed that state pensioners with an annual income of £22,000 will retain their £300 Winter Fuel Allowance, as part of the Labour Party government's reinstated payments. The tax authority has clarified that the allowance will be clawed back for individuals with an income exceeding £35,000.
Income Thresholds and Eligibility
According to HMRC, if your total income for the tax year is £35,000 or less, you will keep the £300 payment. However, if your income exceeds £35,000, HMRC will recover the payment. The tax authority provides an example on its website: "If you live in a household with someone else who has also received a payment, we’ll look at each person’s individual income separately. For example, if your income is £36,000 and your partner’s income is £22,000, we’ll take back your payment, but your partner will keep their payment."
Income Types Included in Assessment
HMRC advises that individuals should include any personal income they receive from the State Pension, company and personal pensions, money earned from employment, and interest from savings. Other income that counts includes any dividends from company shares, income from a trust, and any state benefits that are taxable. You will also need to include any net profits if you are self-employed or from rental income if you rent out property. If you have income from a joint source, such as interest from a joint savings account, you should only include your share of the income.
Recovery Process and Tax Returns
For most recipients, the payment will be recovered through a change to their PAYE tax code from this month (April 2026), with no need to contact HMRC. For those in Self Assessment who file online, the payment should be pre-populated in their 2025 to 2026 tax return, which is due by 31 January 2027. Paper filers will need to add it on their tax return, due by 31 October 2026.
