DWP Winter Fuel Payment: Pensioners over £35,000 urged to act | Personal Finance | Finance
Pensioners in England and Wales are able to opt out of the Winter Fuel Payment for 2026/27, a move that could help certain recipients avoid a tax bill or adjustment further down the line. Under rules introduced last year, the annual heating payment is now targeted at those with incomes at or below £35,000.
However, the payment will be issued automatically, even where a pensioner’s income surpasses that threshold, unless they opt out before the September deadline. In a written response 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.”
For those pensioners on higher incomes, any payment received will be reclaimed by HM Revenue and Customs (HMRC), typically through adjustments to their tax code in the subsequent financial year. Choosing to opt out means the payment is never issued in the first place, removing the need for repayment at a later date.
The Winter Fuel Payment is worth between £200 and £300 depending on age and personal circumstances, and is ordinarily paid automatically to eligible households, reports the Daily Record.
While the amount is determined by household eligibility, it is distributed to people. This means one member of a couple can opt out while the other continues to receive their share, subject to their respective income. Last year, some pensioners were unaware they could opt out before the qualifying week in September, meaning they received the payment and subsequently faced having it clawed back.
The qualifying week for the 2026/27 payment will be September 21 to 27, so anyone wishing to opt out will need to do so before that date. Pensioners who opt out but later find their income drops below £35,000 can still submit a claim for the payment up until March 31, 2027.
Income thresholds and payments
HMRC states that the decision is based on a person’s total personal income for the tax year, prior to any deductions, encompassing earnings from a wide variety of sources.
These include:
- 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 don’t 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.
What happens if you submit a tax return
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.
