Recovery of Winter Fuel Payments
Following the Government's announcement on the Winter Fuel Payment, this will now be paid to all eligible pensioners, but clawed back via the tax system from those with income above £35,000.
This is a change to the position in winter 2024, when the Winter Fuel Payment was only paid to households in receipt of Pension Credit.
The new arrangements will apply to the Winter Fuel Payment in England, Wales and Northern Ireland, as well as the Pension Age Winter Heating Payment in Scotland.
HMRC have issued details of how payments will be recovered via the tax system - a process which will apply across the UK, even though the schemes operate slightly differently across the devolved nations. For ease of reference, we refer to "Winter Payments" in the remainder of this article in relation to both schemes.
Eligibility
For winter 2025, Winter Payments are available to those born before 22 September 1959 and will be paid automatically. Those meeting the eligibility requirements will receive between £100 and £300 (Winter Fuel Payment) or between £101.70 and £305.10 (Pension Age Winter Heating Payment), with the exact amount paid depending on individual circumstances.
Recovery of payments
Winter Payments will be recovered where they are paid to an individual with income above £35,000. There is no tapering of the clawback - just £1 of income above £35,000 will make the difference between retaining or losing the payment. The DWP has developed a calculator so that pensioners can check whether, and how, their Winter Payment will be clawed back.
It is our understanding that income for this purpose will be based on total taxable income, rather than adjusted net income, so there will be no deduction for Gift Aid or similar payments.
Where the pensioner files a Self-Assessment tax return online, HMRC will prepopulate the Winter Payment details automatically if their income is above £35,000. This will need to be manually entered if a paper tax return is submitted.
Pensioners with income above £35,000 who do not file tax returns will have their PAYE coding notice adjusted for the 2026/27 tax year to clawback Winter Payments received during the previous tax year. From April 2027, it is expected that HMRC will recover any Winter Payments in the same tax year they are paid.
Opting out
If a pensioner knows that their income will be above £35,000, they can opt out of receiving their Winter Payment in order to avoid having the payments clawed back. Anyone wishing to opt out needs to to do so before 15 September 2025 to stop payments being made for winter 2025.
It is possible to opt out of the Winter Fuel Payment either by using the online form or contacting the Winter Fuel Payment Centre via email, telephone or post. Social Security Scotland is still to confirm the process of opting out of Pension Age Winter Heating Payment, but will do so by the autumn.
If you experience issues with how the clawback system operates in practice, please let us know at [email protected].