The Winter Fuel Payment has been reinstated by the government, but there is a cut-off for people who are eligible for the £200 to £300 payment
Pensioners have been warned by experts about the “unfair” Winter Fuel Payment cut-off of £35,000, which results in individuals earning £35,001 losing out on the support. They’ve labelled it as “ludicrous” and said it “feels less like a cost-saving measure and more like a lottery”.
Earlier this year, Chancellor Rachel Reeves reinstated the winter fuel payment, which ranges from £100 to £300 depending on individual circumstances. This means that approximately nine million people who missed out last year will receive the money in 2025.
However, there is a £35,000 threshold, with anyone earning that amount in taxable income required to repay it.
Some financial experts have called this ridiculous – because a couple earning £70,000 split to £35,000 each would still receive the winter fuel payment. This has created a cliff-edge – a pensioner with taxable income of £35,001 will lose their Winter Fuel Payment (worth £200–£300), while someone earning £35,000 retains it in full, Newspage reported.
Scott Gallacher, Director at Leicester-based Rowley Turton, pointed out that single pensioners often face higher relative living costs, as they shoulder council tax, utilities, and household bills without the ability to share these expenses, reports the Manchester Evening News.
He further commented: “It’s ludicrous that a single pensioner on just £35,001 loses a Winter Fuel Payment, while a couple with £70,000 joint income might keep theirs. This isn’t just unfair – it undercuts the government’s own growth agenda.
“If you want older workers to return or stay in work, you can’t penalise them with cliff-edges like this. Means-testing should reflect household income or use a taper, not an arbitrary line that punishes being just a pound over. When will the government learn?”.
Eamonn Prendergast, Chartered Financial Adviser at Bromley-based Palantir Financial Planning Ltd, said the cliff-edge feels “more like lottery” than a fair system.
He added: “The £35,000 cliff-edge is a blunt instrument that punishes single pensioners the most. A couple on £70,000 can keep their Winter Fuel Payments, but a widowed pensioner on £35,001 loses theirs entirely, that’s hard to justify as fair policy.
“Household bills don’t halve just because you live alone, and single pensioners often face higher relative costs. A tapered withdrawal would be far fairer than an all-or-nothing cut-off.
“At the very least, the system should recognise household income, not just individual income, if it genuinely wants to target support. Right now, this approach feels less like a cost-saving measure and more like a lottery and it risks hitting those who need help most.”
Personal finance guru Martin Lewis has addressed the matter and cautioned people they must sort out their financial affairs.
Mr Lewis has confirmed some individuals on benefits who believe they’re protected from the threshold could also be affected – as certain benefits are actually taxable – meaning if their combined income from employment, savings and other sources alongside their benefits could tip them over the limit – forcing them to repay the £200 or £300 payments.
On his BBC Podcast, Mr Lewis outlined which benefits might breach the regulations.
Martin explained: “Let’s say you earn £40,000 of taxable income. If you earn £35,000 and a penny, you lose the entire £200. It is not a graduated scheme, it is a cliff edge scheme.”
Mr Lewis noted that investment dividends outside an ISA are included, along with carer’s allowance, incapacity benefit and other taxable state benefits.
Regarding what doesn’t contribute to the £35,000 earnings threshold, Mr Lewis said this encompassed the winter fuel payment itself, investment income or savings income within ISAs, the tax-free lump sum from a pension, capital gains, and non-taxable benefits such as Attendance Allowance, Disability Living Allowance, Pension Credit and PIPS – none of these count towards the £35,000.
He added: “If it’s generally taxable, it counts, if it’s generally not taxable, it doesn’t count.”
State benefits that are taxable
The most common benefits that you pay Income Tax on are:
- Bereavement Allowance (previously Widow’s pension)
- Carer’s Allowance or (in Scotland only) Carer Support Payment
- contribution-based Employment and Support Allowance (ESA)
- Incapacity Benefit (from the 29th week you get it)
- Jobseeker’s Allowance (JSA)
- pensions paid by the Industrial Death Benefit scheme
- the State Pension
- Widowed Parent’s Allowance
Speaking on his BBC podcast, Mr Lewis said that in some cases it would be far simpler to just decide to opt out of the payment, rather than have it land before ending up having to repay it.
People can opt out of the payment on the DWP website here.
