State pensioners are facing automatic tax charges of £200 as part of a nationwide scheme by HMRC to reclaim Winter Fuel Payments. The Labour Party government will clawback the payout from state pensioners under 80 with annual incomes above £35,000.
Two Million Pensioners Affected
Up to two million pensioners across the UK could be impacted by the changes, with most facing automatic repayment through adjustments to their tax code. HMRC confirmed that for a typical Winter Fuel Payment of £200, PAYE customers with income exceeding £35,000 will pay approximately £17 per month extra in tax during the 2026 to 2027 tax year to recover their payment.
How the Repayment Works
The repayments will be collected via higher monthly tax deductions. The typical Winter Fuel Payment is £200 for pensioners aged under 80 who live alone, and the charge will be spread across the 2026–2027 tax year through a change in their PAYE tax code. HMRC provided an example: a basic rate taxpayer with total income of £37,710—comprising £25,737 from a private pension and £11,973 from the State Pension—who received a £200 Winter Fuel Payment in December would see their Personal Allowance adjusted. With a Personal Allowance of £12,570 and total deductions of £12,973, the result is a negative tax-free allowance of £403. Their new tax code becomes K39, meaning they pay extra tax on £399 of income, resulting in around £17 more tax per month.
Self Assessment and Reporting Scams
For pensioners under Self Assessment who file online, the Winter Fuel Payment should be pre-populated on their 2025–2026 tax return, due by January 31, 2027. If the payment is missing, they must add it manually. Those submitting paper returns need to include the payment by the deadline of October 31, 2026. HMRC also reminded pensioners to be vigilant against scams: to report a suspicious text claiming to be from HMRC, forward it to 60599; for suspicious emails, forward to phishing@hmrc.gov.uk; to report a scam phone call, visit GOV.UK. If money has been stolen, contact your bank immediately and notify Report Fraud. In Scotland, contact police on 101.
