With the State Pension set to rise on 6 April, many people are understandably worried that their income may cross the personal income tax threshold for the first time. For CSPA members, another related but key concern has been how changes to the Winter Fuel Payment and the introduction of a £35,000 threshold will affect them, especially since the payment is now being made automatically and may have tax implications for them.
Recognising these concerns, HMRC has provided guidance on how the Winter Fuel Payment will be treated in the 2025–26 tax year.
Below we summarise HMRC’s explanation, including how payments will be recovered, how tax codes will be adjusted, and what people can do if they expect to exceed the income threshold in future years.
Who will keep their Winter Fuel Payment?
From 2025, the Winter Fuel Payment will be subject to recovery based on individual income, not household income. HMRC has confirmed the following:
- If your total individual income in the 2025–26 tax year is £35,000 or less, you will keep your Winter Fuel Payment.
- If your total income is above £35,000, HMRC will recover the value of the payment.
e.g. If two people in the same household both receive a Winter Fuel Payment:
- Person A: Income £36,000 → HMRC will recover their payment
- Person B: Income £22,000 → They keep their payment
Each person is assessed entirely on their own income and HMRC has created an online calculator on GOV.UK to help people estimate their total income and see:
- whether they will exceed the £35,000 threshold
- how any repayment will be collected
How HMRC will recover the payment
For PAYE customers
If you pay tax through PAYE and do not file a Self Assessment return:
- HMRC will recover your Winter Fuel Payment automatically by adjusting your tax code.
- The adjustment will apply from April 2026, affecting your 2026–27 tax code.
- For a typical payment of £200, the monthly deduction will be around £17 per month.
- You should not need to do anything and there should be no need to contact HMRC.
For Self Assessment customers
HMRC will recover the payment through your 2025–26 tax return.
- Online filers (deadline 31 January 2027) will see an entry labelled:
- “Winter Fuel Payment charge” or “Pension Age Winter Heating Payment charge”. If the charge is missing, you will need to add it.
- Paper filers (deadline 31 October 2026) must include the amount themselves.
Can I opt out of receiving the payment in future years?
Yes. If you expect your income to exceed £35,000 in future years and want to avoid HMRC reclaiming the payment later, you can opt out.
In England, Wales and Northern Ireland – You will be able to opt out via a DWP online form on GOV.UK from 1 April 2026.
In Scotland residents must contact Social Security Scotland by phone to opt out of Pension Age Winter Heating Payments. Guidance is available
HMRC has created a step-by-step explainer video about income thresholds and recovery rules. This is available to watch on the HMRC YouTube channel.
