HMRC has confirmed that approximately 1.3 million PAYE-only state pensioners will face automatic deductions from their Winter Fuel Payment, with monthly amounts temporarily rising to around £33 for a typical £200 payment in the 2027-28 tax year.
Who is affected by the Winter Fuel Payment recovery
The extra charges apply to retirees who receive the Winter Fuel Payment from the Department for Work and Pensions (DWP) this winter and have an income over £35,000. The DWP will issue payouts worth up to £300 from the Labour Party government this winter.
HMRC will automatically recover the payments from approximately 1.3 million PAYE-only individuals through an amendment to their tax code. This means the money will be deducted before the recipient receives their pension or other PAYE income.
Deduction schedule for 2026 to 2029
For the 2026 to 2027 tax year, a typical winter payment of £200 will result in deductions of approximately £17 per month from a PAYE customer. In the 2027 to 2028 tax year, deductions will temporarily rise to approximately £33 per month for a typical payment of £200.
HMRC explained that the higher deduction in 2027-28 is because the department will be recovering payments for both the 2026 and 2027 winter payments in that single tax year. This supports the transition to in-year recovery of payments, in line with normal PAYE practice.
From the 2028 to 2029 tax year onwards, deductions will return to approximately £17 per month.
Warning about scams and how to verify payments
The Labour Party government has urged retirees expecting a handout this winter to be careful of Winter Fuel Payment scams. 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."
Lloyd added: "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."
HMRC has stated that it will never contact people by text or email to ask them to repay their Winter Fuel Payment, or to request bank details. The tax authority advises recipients to remain vigilant and use official channels to verify any communications about their payments.
