HMRC has confirmed that state pensioners over 80 who received the up to £300 Winter Fuel Payment and have an annual income exceeding £35,000 will face tax charges. The tax authority will claw back the payment through adjustments to tax codes, affecting the 2026/27 tax year.
Who is affected?
The £300 payments are specifically for state pensioners born before 1946. Younger state pensioners receive £200, which is £100 less. If you received the payment at the end of last year but your annual income is over £35,000, HMRC will act to recover the amount.
According to Money Saving Expert, founded by Martin Lewis, the recovery will be implemented via a change in your tax code for 2026/27. This change is what HMRC is currently contacting people about. Your tax code instructs your private pension provider or employer on how much tax to deduct before paying your income into your bank account.
How the repayment works
The Labour Party government's tax arm should have contacted eligible pensioners in April regarding the tax code alteration. If your annual income exceeds the £35,000 threshold, you will repay the Winter Fuel Payment as additional tax alongside your normal Income Tax payments spread over the 2026/27 tax year.
The Government states that the means test is based on your 'taxable income', which includes all earnings subject to income tax. This encompasses private pensions, the State Pension, employment or self-employment income, non-ISA savings interest, and any other income sources subject to tax.
What is excluded
Notably, the taxable income calculation does not include savings or investment income within ISAs, Capital Gains, the Winter Fuel Payment itself, Pension Credit, Attendance Allowance, or any other tax-free state benefits. This means pensioners with significant ISA savings may still fall below the threshold.
Opting out of the payment
If you know your income will be above £35,000 a year, you can opt out of receiving the payment to avoid having it clawed back later. To opt out, call the Winter Fuel Payment Centre on 0800 731 0160 or complete the online opt out form. This proactive step can prevent the administrative hassle of a tax code change and ensure you don't owe unexpected tax.
