HMRC Doubles Monthly Repayments for Winter Fuel Payment
HMRC is increasing monthly charges for state pensioners from £17 to £33 as part of the Winter Fuel Payment claw back scheme. State pensioners who qualify for the Department for Work and Pensions (DWP) handout will have to give it back if they earn over £35,000.
How the Repayment Mechanism Works
HMRC says it will take back your payment for the 2025 to 2026 tax year by changing your tax code for the 2026 to 2027 tax year. This means you’ll pay more tax each month to pay back the full payment that you received in the 2025 to 2026 tax year. For example, for a typical payment of £200, you’ll pay about £17 each month extra in tax. Unless you opt out of receiving the payment, we’ll collect your payments for the 2 tax years by changing your tax code for the 2027 to 2028 tax year.
Monthly Charges to Rise to £33
HMRC warns state pensioners will eventually see the monthly charge hiked from £17 to £33, saying: "For example, if you receive a payment in each tax year of £200, we’ll deduct about £33 each month extra in tax in the 2027 to 2028 tax year." The 2025/26 opt-out period has now closed for England, Wales and Northern Ireland.
Opt-Out Options from April 2026
From 1 April 2026 you will be able to choose to opt out for payments made from winter 2026/27 onwards. Rayner Essex says: "Planning early avoids unnecessary adjustments and simplifies tax affairs." If your income fluctuates around the threshold, consider advice from a tax specialist to decide the best option each year.
Future Planning for Pensioners
Going forward, pensioners should familiarise themselves with the new framework, so they can plan ahead for future years, the experts add. The opt-out option will reopen from 1 April 2026 for the 2026/27 payment, they say. This will allow individuals who expect their income to exceed the threshold to opt out early, and avoid unnecessary repayment later.
