Chancellor Rachel Reeves has confirmed that some state pensioners will see their monthly payments reduced by £17 under new rules targeting the Winter Fuel Payment scheme. The Department for Work and Pensions (DWP) has outlined the changes and who will be affected.
How the cut works
HMRC will reclaim the Winter Fuel Payment from wealthier pensioners who received the allowance at the end of last year but did not qualify under the updated criteria. The money will be taken back in instalments through adjustments to tax codes, directly reducing state pension payments each month.
For pensioners under 80 who received a £200 Winter Fuel Payment, the monthly reduction will be approximately £17. Those aged 80 and over, who received £300, will face higher deductions.
Who is affected
Winter Fuel Payments are now means-tested. Anyone with an annual income exceeding £35,000 no longer qualifies for the payment. The government considers these individuals financially comfortable enough to manage without the extra support.
All over-65s initially receive the payment, but those above the income threshold must repay it. HMRC automatically collects the repayment through tax code adjustments unless the pensioner already files a self-assessment tax return.
Repayment schedule
The government has set out a phased repayment plan. In the 2026-27 tax year, HMRC will deduct approximately £17 per month for a typical £200 payment. In 2027-28, deductions will rise to around £33 per month as repayments for both 2026 and 2027 are collected. From 2028-29 onwards, the monthly deduction will return to £17.
For pensioners who file self-assessment tax returns online, HMRC will automatically include the Winter Fuel Payment as income on their 2025-26 tax return.
State pension increase
The state pension recently increased by up to £575 per year under the triple lock, providing some offset for affected pensioners. However, the government emphasises that those with total income over £35,000 must repay the Winter Fuel Payment, and the deductions will continue until the full amount is recovered.
The DWP advises pensioners to check their tax codes and contact HMRC if they have questions about their repayment schedule.
