HMRC is set to claw back £300 from state pensioners who received the Winter Fuel Payment or the Pension Age Winter Heating Payment. Pensioners with a total income of £35,000 or more for the tax year will need to repay the payment to HMRC.
Who Is Affected?
If your total income for the 2025 to 2026 tax year is £35,000 or less, you will keep your payment. However, if it exceeds £35,000, HMRC will reclaim the full amount. The Department for Work and Pensions (DWP) reinstated the allowance for nine million state pensioners last year, and HMRC has now outlined the repayment process.
How HMRC Will Recover the Payment
On its website, HMRC explains: "You will need to wait for us to take back the payment; you cannot pay it sooner as a lump sum. We will take your payment for the 2025 to 2026 tax year by changing your tax code for the 2026 to 2027 tax year. This means you will 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 will pay about £17 per month extra in tax. In April 2026, you will receive a letter or email notification informing you that your tax code has been changed to reclaim the Winter Fuel Payment, which will show as an underpayment.
What If Your Income Changes?
Once HMRC confirms your income for the 2025 to 2026 tax year, it will check whether you still need to repay the amount. If you do not need to repay, HMRC will update your tax code to remove the underpayment and ask your pension provider or employer to refund any extra amounts already paid through your pension or employment.
If HMRC cannot collect the full amount due through your tax code during the tax year, it will send you a tax calculation. Unless you opt out of receiving the payment, HMRC will collect payments for the two tax years by adjusting your tax code for the 2027 to 2028 tax year.
Self Assessment Taxpayers
If you are in Self Assessment, you will repay the payment through your usual Self Assessment tax return, as you cannot pay it sooner. Your payment must be included on your tax return for each tax year from the 2025 to 2026 tax year onward.
