Unless opted out, pensioners will have received the winter fuel payment for 2025/26; however, HMRC can recover this payment if their income exceeds £35,000. Recently, HMRC has updated its guidance regarding the recovery process.
The threshold
The winter fuel payment, known as the pension age winter heating payment in Scotland, must be repaid if a pensioner’s income surpasses £35,000. If the income is £35,000 or lower, the payment is retained in full.
In cases where multiple individuals in the same household receive a payment, HMRC assesses each person’s income independently. For instance, if one partner earns £36,000 and the other earns £34,000, only the partner with the £36,000 income will be required to repay their winter fuel payment.
The income
For the winter fuel payment disbursed in November or December 2025, the relevant income pertains to the 2025/26 tax year:
All forms of taxable income are considered before any deductions are applied. The figures for savings and dividend income are calculated before accounting for the personal savings allowance or dividend allowance. Income from individual savings accounts (ISAs) and other tax-exempt savings is not included.
Your portion of the income is only counted when it originates from a joint source, such as a joint savings account.
The recovery
Pensioners who file a self-assessment tax return must report the winter fuel payment on their return, and if it is subject to repayment, this amount will typically be included in the self-assessment tax bill automatically.
For others, HMRC usually recovers the payment through an adjustment to their tax code. The payment received in November or December 2025 will be reclaimed by modifying the tax code for the 2026/27 tax year, resulting in a higher tax rate than what was previously paid each month. For example, with a winter fuel payment of £200, a tax code adjustment would lead to an additional tax payment of approximately £17 each month.