HMRC is sending new tax codes to state pensioners to recover winter fuel payments from those who exceeded the £35,000 earnings threshold. The payments, ranging from £200 to £300, were made automatically under a revised system that replaced the previous Pension Credit-linked scheme. An estimated two million pensioners are affected.
How the Repayment System Works
State pensioners under 80 received £200, while those aged 80 or over received £300. According to HMRC guidance on Gov.uk, pensioners who earned more than £35,000 from any income source—including work or savings—must repay the amount. Unless they normally submit a self-assessment tax return or are asked to do so, the recovery will happen through a change in their PAYE tax code.
HMRC will adjust the tax code and notify pensioners by letter or via the HMRC app. The repayment is spread over the 2026-2027 tax year, with approximately £17 extra tax per month for a typical £200 payment. If the full amount cannot be collected during the tax year, HMRC will send a tax calculation.
Official Guidance and Quotes
An HMRC spokesperson stated: “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.”
Impact on Pensioners
Pensioners cannot repay the amount early; they must wait for HMRC to adjust their tax code. The recovery applies to the 2025-2026 tax year payments, with adjustments made in the following tax year. This system aims to simplify repayment but has drawn attention due to the number of pensioners affected.
