Most pensioners will have received the annual allowance but the DWP warns there are four circumstances where people may have to repay the money
Millions of pensioners have seen their bank accounts boosted by their Winter Fuel Payment. The cash, is designed to ease the burden of soaring energy bills, was distributed to most over-65s throughout November and December.
Previously available to all pensioners, the payment underwent a dramatic shake-up last year when Labour restricted it to those claiming certain means-tested benefits like Pension Credit. This slashed the number of recipients to just 1.5 million.
However, following fierce backlash from pensioner advocacy groups, the Government performed a major U-turn for the 2025/26 winter period. Chancellor Rachel Reeves reinstated the payment for pensioners earning up to £35,000 annually, dramatically expanding eligibility to nine million people.
Those born before September 22, 1959 were automatically receiving between £100 and £300. But officials have said there are specific situations where recipients must return the money.
Your income exceeds £35,000
Anyone whose annual income tops £35,000 must repay the funds unless they’ve already declined to receive it. HMRC clarifies this threshold applies to personal income, stating: “If your total personal income for the tax year is £35,000 or less – you’ll keep your payment, more than £35,000 – HMRC will take back your payment.
“If you live in a household with someone else who has also received a payment, we’ll look at each person’s individual income separately. For example, if you earn £36,000 and your partner earns £22,000, we’ll take back your payment, but your partner will keep their payment.”
You fail to report a change immediately
Under government rules, you’ll be required to hand back money if you failed to notify officials of a change in your circumstances promptly. This might include moving house or no longer receiving a benefit that qualified you for the payment.
You provided incorrect information
If you were awarded the payment after supplying inaccurate details during your application, you’ll be obliged to return the funds. This could involve something as simple as entering the wrong date of birth on your form.
You’re overpaid by mistake
Occasionally, errors occur within the DWP or HMRC that result in people being given excessive amounts. Should this happen, you’ll be expected to reimburse any sum you weren’t entitled to receive.
How to repay the money when your income exceeds £35,000
If you are not in self assessment
HMRC says if your personal income is over £35,000 you will have to repay the money but must need to wait for it to take back the payment. It says: “You cannot pay it sooner”.
It says: “We’ll take your payment for the 2025 to 2026 tax year by changing your PAYE tax code for the 2026 to 2027 tax year. This means you’ll pay more tax each month to pay back the full payment that you received in the 2025 to 2026 tax year.
“For example, for a typical payment of £200, you’ll pay approximately £17 per month extra in tax. You’ll get a letter or a notification in the HMRC app to tell you that we’ve changed your PAYE tax code.
“We’ll review all of the tax you paid against the tax you were due to pay. If we have been unable to collect the full amount due during the tax year, in your tax code, we’ll send you a tax calculation.”
If you receive payments in the 2026 to 2027 and 2027 to 2028 tax years
It adds: “Unless you opt out of receiving the payment, we’ll collect your payments for the 2 tax years by changing your PAYE tax code for the 2027 to 2028 tax year. For example, if you receive a payment in each tax year of £200, we’ll deduct approximately £33 per month extra in tax in the 2027 to 2028 tax year.”
If you receive a payment for the tax year 2028 to 2029 or onwards
HMRC says it will then collect your payment by adjusting your PAYE tax code for the tax year in which you receive the payment.
If you complete a Self Assessment tax return
HMRC explains the money must be repaid through the usual Self Assessment tax return, again added: “You cannot pay it sooner.”
It says: “You do not need to include the payment in your 2024 to 2025 tax return. This is because we’ll not take back any payment you received in the 2024 to 2025 tax year.
“Your payment will need to be included on your tax return for each tax year from the 2025 to 2026 tax year. If you file your tax return online, where possible we’ll automatically include the amount of your payment. It will show on your 2025 to 2026 return, as either a Winter Fuel Payment charge or Pension Age Winter Heating Payment charge.
“You should check that your Winter Payment is automatically shown on your online return and include it if not. If you file a paper Self Assessment tax return, you’ll need to add the payment to your 2025 to 2026 tax return. You’ll then pay the payment back through your Self Assessment tax bill in the tax year in which you receive the payment, unless you opt out of receiving the payment.”
