The Department for Work and Pensions (DWP) has provided further clarification on the Winter Fuel Payment rules for the 2026/27 season. Following changes introduced last year, the annual heating allowance is now means-tested, with eligibility limited to pensioners whose total income does not exceed £35,000.
Opt-Out Option Available
Pensioners across England and Wales have the option to decline the Winter Fuel Payment for 2026/27, a decision that could help some avoid a tax bill or future adjustment. Despite the means-testing, the payment will be issued automatically—even to those earning above the threshold—unless recipients opt out before the September cut-off.
In a written reply to DUP MP Gregory Campbell, Pensions Minister Torsten Bell explained: "Anyone who expects their total income to exceed £35,000 can opt out of receiving future payments via GOV.UK, or through Social Security Scotland if they live in Scotland, and will not be subject to the charge. Opting out applies only to payments not yet made."
Clawback for Higher Earners
For wealthier pensioners, any payment received will be clawed back by HM Revenue and Customs (HMRC), generally through changes to their tax code in the subsequent financial year. By opting out, the payment is not issued at all, removing the need for repayment down the line, reports the Daily Record.
The Winter Fuel Payment ranges from £200 to £300, depending on age and personal circumstances, and is normally paid automatically to qualifying households. While the sum is determined by household eligibility, it is issued to individuals. This allows one partner in a couple to refuse the payment while the other still receives theirs, based on their respective incomes. Last year, some pensioners were unaware they could opt out ahead of the qualifying week in September, resulting in them receiving the payment and subsequently having it clawed back.
Key Dates and Claiming
The qualifying week for the 2026/27 payment falls between September 21 and 27, so anyone wanting to opt out must do so beforehand. Pensioners who opt out but later discover their income drops below £35,000 can still submit a claim for the payment until March 31, 2027.
Income Thresholds and Payments
HMRC states the decision is determined by a person's total personal income for the tax year, before deductions. This encompasses income from a broad range of sources, including:
- State Pension
- Workplace or personal pensions
- Earnings from employment
- Savings interest
- Dividends from shares
- Rental income or self-employment profits
- Taxable state benefits
- Income from trusts
Where couples both receive the payment, each person's income is assessed separately. For example, if one partner earns £36,000 and the other earns £22,000, HMRC would reclaim the payment from the higher earner while the lower-earning partner would keep theirs.
How the Payment Will Be Taken Back
Pensioners who do not complete a Self Assessment tax return will have the funds reclaimed via their tax code. HMRC will modify the tax code for the subsequent tax year so the repayment is collected incrementally through PAYE. For a typical payment of approximately £200, this would equate to paying roughly £17 monthly in additional tax.
Pensioners required to repay the money will receive correspondence from HMRC next month (April) outlining the tax code alteration and how the repayment will be collected. Should HMRC be unable to recover the full sum through the tax code during the year, a tax calculation may be issued alternatively.
Those who submit a Self Assessment tax return will reimburse the Winter Fuel Payment or PAWHP through their standard tax bill. The payment must be declared on the return as a specific "Winter Fuel Payment charge". Those submitting online may find the charge is automatically included in their return; however, HMRC advises taxpayers to verify the figure is present and enter it by hand if it appears to be absent. Paper tax returns will need the amount to be filled in manually. HMRC has additionally released a YouTube video to assist pensioners in determining whether they are required to repay the payments.
