The government has announced that Winter Fuel Payments will be subject to a new income-based clawback. This means that pensioners with income above £35,000 (including State Pension, private or occupational pensions, savings interest, and rental income) will be required to repay some or all of the payment through the tax system. This means many people won’t realise they’re affected until after they’ve received the payment.

How the clawback works

Rather than restricting who receives the payment upfront, the government intends to recover it through Self-Assessment or PAYE. For those already in Self-Assessment, it will show as a tax liability. For those not currently in Self-Assessment, HMRC may recover the amount through an adjustment to their tax code.

Why this could catch people out

The £35,000 threshold is based on total income, not just earnings. The full new State Pension is around £11,500 a year - add a modest private pension and some savings interest, and £35,000 is closer than many people expect.
Those who do not normally complete a tax return may be unaware that they now have an obligation to notify HMRC.
There is also a risk for couples, where each individual is assessed separately. One partner may be caught by the threshold while the other is not, creating an uneven and sometimes confusing outcome.

What you should do

If you or a family member received the Winter Fuel Payment in the 2025/26 tax year, please let us know when you provide us with your records. We can help you understand whether you are affected and whether you need to register for Self-Assessment.

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Please get in touch with us if you have any concerns – it’s much better to plan ahead than to receive an unexpected tax demand after the fact.

_{This is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this publication can be accepted by the authors or the firm.}

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