If you’re a pensioner and you received your Winter Fuel Payment last winter, there’s a good chance HMRC is already planning to take it back. And if nothing changes, some households could face a double hit — repaying this year’s payment and next year’s all at once.
Here’s what you need to know.
What’s changed?
The Winter Fuel Payment has had a turbulent couple of years. It was restricted in 2024/25 to Pension Credit recipients only, then reinstated for 2025/26 for all state pensioners. But the reinstatement came with a catch: a new £35,000 income threshold. If your individual taxable income exceeds £35,000, HMRC will claw the full payment back.
There’s no tapering, no middle ground. One pound over the limit and you lose the whole thing.
The double-hit risk
This is the bit that’s catching people off guard.
If HMRC doesn’t recover the 2025/26 payment during the current tax year, they’ll collect it alongside the 2026/27 clawback the following year — meaning some pensioners could see two years’ worth recovered through their tax code at the same time. That’s a significant and unexpected hit on monthly income for anyone on PAYE.
If you’re in Self Assessment, the 2025/26 clawback will show up in your tax return calculation. Either way, it’s worth knowing about before it lands.
How much are we talking about?
The payment amounts are:
- Both partners under 80: £100 each (£200 total)
- Both partners 80 or over: £150 each (£300 total)
- Mixed ages: £200 for the older partner, £100 for the partner under 80
A couple doesn’t mean a combined assessment
This is one of the most common misconceptions I come across. The £35,000 threshold is assessed on each person’s individual taxable income — not the household combined total.
That means one partner could have their payment clawed back while the other keeps theirs, depending entirely on their own income. A couple where one partner earns £50,000 and the other earns £20,000 would lose one payment but keep the other.
For couples just either side of the threshold, it’s worth understanding exactly where each of you stands.
What counts as taxable income?
The threshold captures more than most people initially think. It includes:
- State Pension
- Private and workplace pensions
- Employment or self-employment income
- Rental income
- Interest from savings (outside an ISA)
- Dividends
ISA interest and income is excluded, which is worth bearing in mind when thinking about how savings are structured.
What can you do?
If you’re in Self Assessment: The clawback will be included in your 2025/26 return. Make sure your return accurately reflects your total taxable income — and if you’re not sure where you stand, speak to us before you file.
If you’re not in Self Assessment: HMRC will adjust your 2026/27 tax code to recover the payment. You may already have received a letter, text or email from HMRC about this. Note: genuine HMRC messages will not include links — they’ll ask you to visit Gov.uk directly.
If you want to opt out of next year’s payment: If your income is likely to remain above £35,000 in 2026/27, you can opt out of receiving the payment altogether — avoiding the need for it to be recovered later. The opt-out deadline for 2026/27 is 20 September 2026. You can do this via Gov.uk or by calling the Winter Fuel Payment Centre on 0800 731 0160.
If you claim Pension Credit: You’re protected from the clawback regardless of other income. And if you think you might be eligible for Pension Credit but haven’t applied, it’s worth checking — eligibility can provide a meaningful financial benefit beyond the Winter Fuel Payment alone. it’s worth checking — and if you’d like to review your wider retirement finances, our Wealth Management team can help.
Not sure where you stand?
These changes have created a lot of confusion — particularly around couples, the cliff-edge threshold, and how the clawback actually gets collected. If you’re a WDS client and you’d like to talk through how this affects your tax position, get in touch with the Bradford team and we can work through it with you.
Debra Fossett is based at our Bradford office. If you have any questions about your personal tax position, please contact us here.
