The way Winter Fuel Payments are handled has changed significantly, leaving some pensioners wondering why HMRC is recovering money that was originally paid to help with heating costs.

Under the current rules, HMRC recover Winter Fuel Payments from people whose individual total annual income is more than £35,000.

The payment is generally still made first, but an equivalent amount is later collected through the tax system. Pensioners with total income of £35,000 or less normally keep their payment.

This is not a gradual reduction. Someone whose relevant income is only slightly above £35,000 can still face recovery of the entire Winter Fuel Payment.

For winter 2026 to 2027, eligible people can receive between £100 and £300, depending on their age and household circumstances. Most eligible pensioners are expected to receive their money automatically in November or December 2026.

Why Does HMRC Recover Winter Fuel Payments?

The government restored wider Winter Fuel Payment eligibility from winter 2025 but introduced a tax charge designed to recover the payment from pensioners with higher incomes.

Instead of requiring everyone to complete a separate means test before receiving the money, the system allows eligible pensioners to receive the payment and then uses HMRC income information to determine whether it needs to be recovered.

The key threshold is:

Individual total income What happens?
£35,000 or less Winter Fuel Payment can normally be kept
More than £35,000 HMRC normally recovers the full payment
Relevant means-tested benefit received Special exemption may apply

The £35,000 test applies to the individual, not the household. Therefore, one member of a couple may have to repay their Winter Fuel Payment while the other keeps theirs.

For example, if one partner has total income of £38,000 and the other has income of £24,000, HMRC can recover the first person’s payment while leaving the second person’s payment untouched.

What Income Counts Towards the £35,000 Threshold?

HMRC looks at total income for the tax year rather than simply checking the amount someone receives from their State Pension.

Income that may need to be considered includes:

Where income comes from a joint source, such as a jointly held savings account, the individual normally includes only their share.

This means a pensioner may have a relatively modest State Pension but still exceed the threshold because they also receive a private pension, investment income or earnings.

Anyone trying to understand how pension-related entries appear alongside their normal payments may also find the guide to the Winter Fuel Payment reference useful.

Is the £35,000 Threshold Based on Household Income?

No. This is one of the most important points about the recovery system.

HMRC assesses each pensioner separately.

A household could therefore have combined income considerably above £35,000 without both people necessarily losing the payment.

Consider this example:

Pensioner A

HMRC would normally recover Pensioner A’s Winter Fuel Payment.

Pensioner B

Pensioner B could normally keep their payment.

The £35,000 threshold is therefore not a £35,000 household-income limit.

How Will HMRC Recover the Winter Fuel Payment?

The collection method depends largely on how the individual normally pays Income Tax.

Recovery Through a PAYE Tax Code

For many pensioners, HMRC will recover the payment automatically by adjusting their PAYE tax code.

For a typical £200 Winter Fuel Payment relating to winter 2025, HMRC says an affected PAYE taxpayer may pay approximately £17 more tax per month during the 2026 to 2027 tax year.

The adjustment may appear as an underpayment when HMRC changes the tax code.

This does not necessarily mean the pensioner previously failed to pay their ordinary Income Tax correctly. The tax-code adjustment may simply be the mechanism being used to collect the Winter Fuel Payment charge.

Pensioners who see an unexpected tax adjustment may also want to understand how pension tax overcharge issues can arise before assuming every change relates to the Winter Fuel Payment.

Recovery Through Self Assessment

People who already complete Self Assessment will generally repay the amount through their tax return rather than through an automatic PAYE coding adjustment.

For online returns, HMRC aims to pre-populate the Winter Fuel Payment charge where possible. However, taxpayers should check that the correct amount appears.

For the 2025 to 2026 tax year, the online Self Assessment filing deadline is 31 January 2027, while paper returns are normally due by 31 October 2026.

A person does not normally have to register for Self Assessment solely because they need to repay a Winter Fuel Payment.

Can Pensioners Repay the Money Immediately?

Generally, no.

HMRC’s guidance states that people whose payment is being recovered through their tax code should wait for HMRC to collect it. They cannot simply send the Winter Fuel Payment back early as a separate lump-sum repayment.

This distinction is particularly important because scammers may attempt to convince pensioners that they need to make an urgent bank transfer or card payment.

Who Does Not Have to Repay the Winter Fuel Payment?

People with total income of £35,000 or less will normally keep their Winter Fuel Payment.

There are also protections for people receiving certain means-tested benefits during the relevant qualifying week.

HMRC guidance identifies the following benefits:

People receiving one of these qualifying benefits during the relevant qualifying week are not normally subject to the Winter Fuel Payment charge, regardless of their income.

What Happens If Income Is £35,001?

The Winter Fuel Payment recovery is effectively an all-or-nothing charge rather than a tapered system.

If total income is £35,000 or below, there is normally no charge.

If total income exceeds £35,000 and no exemption applies, the charge is equal to the full Winter Fuel Payment received.

Therefore, someone with income of £35,001 could potentially have the same Winter Fuel Payment recovered as somebody with income substantially above the threshold.

The payment itself is not treated as ordinary taxable income. Instead, legislation imposes a separate Income Tax charge equivalent to the value of the payment.

Can Someone Opt Out Instead?

Yes.

Pensioners who expect their income to exceed £35,000, or who simply do not want the payment, can opt out.

For the winter 2026 to 2027 Winter Fuel Payment, the current deadlines are:

Those receiving State Pension can use the Manage Your State Pension service, while an online opt-out form is also available.

Importantly, opting out does not affect a person’s State Pension.

People also do not need to opt out every year. Once they have opted out, they will normally remain opted out until they choose to receive the Winter Fuel Payment again.

What Happens With Winter Fuel Payments in 2026 and 2027?

There is a transitional period in the PAYE recovery system.

HMRC says that payments relating to the 2026 to 2027 and 2027 to 2028 tax years may both be recovered through PAYE during 2027 to 2028.

For someone receiving a typical £200 payment in both years, this could mean approximately £33 per month in additional tax during 2027 to 2028.

From 2028 to 2029 onwards, HMRC intends to move towards collecting the charge in the same tax year in which the payment is received.

This temporary arrangement means affected pensioners should pay particular attention to future tax-code notices rather than assuming a larger deduction is necessarily an error.

What If HMRC Recovers the Payment but Income Turns Out to Be Below £35,000?

HMRC can initially adjust a tax code using the information available to it.

However, once final income information for the relevant year is confirmed, HMRC will check whether the Winter Fuel Payment should actually have been recovered.

If it turns out that the individual’s income did not exceed the threshold, HMRC says it can update the tax code and arrange for tax already deducted to be refunded through the person’s pension provider or employer.

Pensioners should therefore check tax-code notices carefully, particularly where their income has recently fallen or changed substantially.

Should Pensioners Be Worried About Winter Fuel Payment Scams?

Winter Fuel Payment Scams

Extra caution is necessary.

HMRC warned in April 2026 that scammers were already using Winter Fuel Payment recovery as a way to target pensioners.

The department said it had received more than 25,000 scam referrals connected with Winter Fuel Payments during the previous 12 months.

Most importantly, HMRC says it will not contact people by text message or email asking them to repay their Winter Fuel Payment or provide their bank details.

A message demanding immediate payment, card details, passwords or banking information should therefore be treated with suspicion.

What Should Pensioners Do Now?

Pensioners do not generally need to contact HMRC simply because their income exceeds £35,000.

Instead, they should:

  1. Check their expected total income for the relevant tax year.
  2. Review any HMRC tax-code notice carefully.
  3. Check their Winter Fuel Payment amount.
  4. Make sure any Self Assessment charge is correctly shown.
  5. Consider opting out before the deadline if they expect to be above the threshold.
  6. Avoid responding to unexpected messages demanding repayment.

HMRC provides an online service for checking whether the £35,000 threshold is likely to apply.

Conclusion

The rules allowing HMRC to recover Winter Fuel Payments are designed to give the payment automatically to eligible pensioners while reclaiming it from individuals with total income above £35,000.

For most affected people, repayment happens automatically through a PAYE tax-code adjustment or Self Assessment rather than through a separate payment to HMRC.

Because the threshold is individual and the recovery is not tapered, pensioners close to £35,000 should check their income carefully. They should also remain alert to scams and review any tax-code changes before taking action.

Frequently Asked Questions

Why is HMRC taking back my Winter Fuel Payment?

If your individual total income is more than £35,000 and no exemption applies, HMRC can recover an amount equal to your Winter Fuel Payment.

Is the £35,000 Winter Fuel Payment limit per person?

Yes. HMRC assesses individual income rather than combining the income of a couple or household.

Will HMRC take the money directly from my bank account?

Normally no. Recovery is generally handled through a PAYE tax-code adjustment or through Self Assessment.

Do I repay only part of the payment if I am slightly above £35,000?

No. The charge is not tapered. If the threshold is exceeded, the full Winter Fuel Payment can normally be recovered.

Can I send my Winter Fuel Payment back to HMRC myself?

HMRC says people should not make an early lump-sum repayment. The appropriate amount will normally be collected through the tax system.

Can I stop HMRC recovering future Winter Fuel Payments?

People expecting to exceed the income threshold can choose to opt out of receiving future payments. For winter 2026 to 2027, the online opt-out deadline is 20 September 2026.