Brace yourselves, pensioners! Millions are receiving a Winter Fuel Payment, but a significant number will have to return it. This year, the Department for Work and Pensions (DWP) is distributing payments of up to £300 to eligible pensioners, starting in November. But here's where it gets controversial: not everyone gets to keep it. This article breaks down who gets to keep the cash and who has to pay it back.
The Winter Fuel Payments are for those born before September 22, 1959, designed to help with heating costs during the colder months.
The key detail? Only pensioners earning less than £35,000 annually will be eligible to retain the full payment, which ranges between £100 and £300. Previously, payments were only sent to those who qualified, but this year, the government is sending payments to nearly everyone, except those who have previously opted out.
But what if you earn more than £35,000? HMRC will reclaim the payment through your tax. The process depends on how you usually pay your taxes.
You can check on the gov.uk website if HMRC will take back your Winter Fuel Payment.
Who Pays It Back?
If your income exceeds £35,000, you'll have to return the payment. Approximately two million people in England and Wales are over State Pension age and have taxable income above this threshold. Taxable income includes earnings, pensions, savings interest, and taxable state benefits.
How HMRC Recovers the Money:
HMRC will recover the money in one of two ways:
- PAYE System: If you're on PAYE (Pay As You Earn), the money will be automatically recovered. HMRC will adjust your tax code for the 2026/2027 tax year. The deduction will start in April 2026. For example, if you owe £200, expect about £17 to be deducted monthly.
- Self Assessment Tax Return: If you file a Self Assessment tax return, you'll include the payment amount in your 2025/2026 tax return. If you file online, it will be automatically included. If you file a paper return, you'll need to add it yourself. The deadlines are January 31, 2027 (online) and October 31, 2026 (paper).
Important Note: You don't need to register with HMRC to pay back the Winter Fuel Payment.
Can you pay it back immediately? No, you must wait for HMRC to recover the payment through the methods described above.
What do you think about this system? Do you believe the income threshold is fair? Share your thoughts in the comments below!
