Thousands of state pensioners will be charged an extra £33 per month in tax by HMRC starting in April 2026, under new rules for reclaiming winter fuel payments. The change affects an estimated two million pensioners whose income exceeds the £35,000 threshold.
How the New System Works
HM Treasury has published guidance on the gov.uk website explaining the revised collection mechanism. Previously, the winter fuel payment was universal. In 2024, eligibility was restricted to those receiving Pension Credit (earning about £11,300 or less). That unpopular policy lasted only one winter before the current system was introduced.
Under the new arrangement, all pensioners receive the payment, but HMRC reclaims the money from those earning £35,000 or more in a given tax year. Pensioners can opt out of receiving the payment to avoid repayment, but if they do not, HMRC adjusts their tax code.
Repayment Schedule
For the winter fuel payment made between November 2025 and January 2026, tax codes will change from April 2026, requiring repayment of about £17 per month. For those who continue to receive payments in the following tax year (2026-2027) without opting out, the tax code will be adjusted to collect for both years, resulting in a £33 monthly deduction.
HMRC's guidance states: “We’ll take your payment for the 2025 to 2026 tax year by changing your 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.”
Notification and Self Assessment
HMRC will send letters or email notifications in April 2026 informing pensioners of the tax code change, which will show as an underpayment. The guidance adds: “Any tax code letter or notification before this will not include this change.” For those already registered for Self Assessment, the repayment will be collected via their tax return instead.
An HMRC spokesperson said: “The majority of people who need to pay back a Winter Fuel Payment will do so automatically via their tax code. For those already registered for Self Assessment, it will be collected via their tax return. We’ve provided online guidance clearly explaining how recovery of payments works, and a calculator so people can see if they’ll need to pay back the payment.”
