HMRC brings forward collection of Winter Fuel Payments through PAYE codes

HMRC has announced a change to how Winter Fuel Payments, and Pension Age Winter Heating Payments in Scotland, will be recovered from recipients with income over the £35,000 threshold. Where two people in the same household receive a payment, entitlement is assessed individually rather than by household income.

While HMRC previously planned to begin collecting payments in-year from April 2027 alongside any payments made in 2025/26, some PAYE taxpayers may now see deductions begin earlier, from January 2027, as tax codes are updated ahead of the 2027-28 tax year.

Those with an income of £35,000 or less will keep their payment. 

Two payments may be collected at the same time

From April 2027, HMRC will start recovering Winter Fuel Payments in advance through PAYE in the same tax year they are paid. 

As a transitional measure, some taxpayers who received payments in November or December 2026 could have those payments collected through their tax code from January 2027. At the same time, payments for 2026/27 will be collected via PAYE for the remainder of the 2026/27 tax year. 

For example, an individual who received £200 of winter fuel payment in 2025/26 and a further £200 in 2026/27 may see their monthly tax increase by around £30 to £33 during the period both payments are being recovered from January 2027. 

HMRC stresses that no one will repay more than the value of the payments they received. Amounts received depend on circumstances and whether the individual is resident in Scotland or the rest of the UK.

From April 2028 onwards, most taxpayers will only have one winter payment collected at a time through their tax code, equating to around £17 extra tax per month for a £200 payment. Those who receive the payment for the first time will have a period of double payment commencing in the January following first receipt.

No action required for PAYE only taxpayers

HMRC will automatically adjust tax codes for PAYE taxpayers who need to repay their winter payment. They do not need to contact HMRC.

Those completing a Self Assessment tax return and earning more than £35,000 should include the winter payment on their return for the year in which it was received. HMRC expects the information to be pre-populated for most online filers, but taxpayers should check and amend entries where necessary.

Option to opt out

Taxpayers can choose not to receive future winter payments. Residents of England, Wales and Northern Ireland must contact the DWP by 20 September to opt out for that year, while Scottish residents have until 19 October to use the online service or should contact Social Security Scotland before their payment is issued.

More information is available on the GOV.UK guidance for Winter Fuel Payment or mygovscot for guidance on Pension Age Heating Payment.

Implications for taxpayers in Making Tax Digital 

For those in MTD testing for the 2025/26 tax year, there will be no facility in the 2025/26 MTD tax return to allow entry of the claw back of Winter Fuel Payment or Pension Age Winter Heating Payment. HMRC will instead calculate the charge separately and advise of the amount due by letter. 

Payment of the tax charge should be made in the usual manner. HMRC have confirmed there should be no late penalty or interest charged on the clawback due, where their calculations are not received by normal payment dates. 

For 2026/27, the tax charge will be incorporated into the MTD tax return.