Pensioners could face extra tax bills if they meet certain requirements
The Department for Work and Pensions (DWP) is urging pensioners across the UK to check if they could face having their Winter Fuel Payments recovered through the tax system and may need to opt out of the payment before the winter season returns.
People wanting to opt out of Winter Fuel Payments only have until September to inform the DWP of this. However, the deadline will differ depending on how you contact the department. Those calling in to opt out have until September 18 but people who choose to opt out online will have until September 20 to finish the process.
Winter Fuel Payments start being distributed every November to people over the state pension age. It offers between £100 and £300 in the one-off payment but eligibility for the scheme has drastically changed over recent years.
Until the 2023/2024 winter period, these payments were given to everyone in the UK over the state pension age. However, for the 2024/2025 winter the system became means-tested with restricted eligibility only allowing people on specific benefits like Pension Credit to receive the payment.
The restricted eligibility saw a wave of backlash and the Government subsequently shifted the criteria again.
Now, the payment is once again given to everyone over the state pension age. However, people who have an annual income over £35,000 will have the payment recovered through their taxes.
Income that is included in Winter Fuel Payment calculations:
- State Pension
- Company and personal pensions
- Money you earn from employment
- Interest from savings
- Dividends from company shares
- Income from a trust
- Any state benefits that are taxable
- Net profits if you are self-employed
- Net profits from rental income if you rent out property
Income is assessed on an individual basis, not according to household. This could mean that a pension-age couple living together with different income levels could see one of them having to pay higher taxes to return the payment while the other could be entitled to keep it.
Higher-earning pensioners can use a new online HMRC calculator to determine whether they are earning enough for their Winter Fuel Payments to be clawed back via taxes.
Pensioners who do have yearly incomes above £35,000 and don’t want to see their tax bill increased to return the Winter Fuel Payment can opt out of receiving it in the first place.
To opt out of the payments, pensioners will need to provide their National Insurance number on the online form or when calling the helpline. Once you opt out, you won’t need to opt out again the next year as you won’t receive future payments unless you opt in again.
To opt into the Winter Fuel Payments you will need to contact the Winter Fuel Payment Centre before the end of the winter season you are wanting a payment for. For example, if you want to get a payment for the 2026/2027 winter season you will need to contact the centre before March 31, 2027.
More information can be found on the Gov.uk website.
