HMRC to take £17 a month payment away from state pensioners | Retirement | Finance
Thousands of state pensioners earning more than £35,000 a year are now paying extra tax each month as HM Revenue and Customs (HMRC) starts reclaiming Winter Fuel Payments made last winter. The recovery process, which began from April 2026, affects pensioners whose taxable income exceeded the £35,000 threshold during the 2025/26 tax year. Rather than asking people to make a lump sum repayment, HMRC is recovering the money automatically through adjustments to PAYE tax codes or through the Self Assessment system.
For many pensioners, the additional tax amounts to around £17 per month until the payment has been repaid in full. The average Winter Fuel Payment is £200, although payments ranged from £100 to £300 depending on individual circumstances. HMRC confirmed that most PAYE taxpayers will not need to take any action.
It said: “For most, the payment will be recovered through a change to their PAYE tax code from this month (April 2026) with no need to contact HMRC.
“For those in Self Assessment who file online, the payment should be pre-populated in their 2025 to 2026 tax return, due by 31 January 2027. Customers should check and add it manually if it is not shown. Paper filers will need to add it on their tax return, due by 31 October 2026.”
The tax authority also explained how the monthly repayments are calculated.
It added: “For a typical Winter Fuel Payment of £200, PAYE customers with income more than £35,000 will pay approximately £17 per month extra in tax during the 2026 to 2027 tax year to recover their payment.”
Letters and emails notifying affected households of their revised tax codes began being issued from April, with the changes automatically increasing the amount of tax deducted each month.
Pensioners cannot choose to repay the money early and must wait for HMRC to recover it through the tax system.
Explaining how the tax code change will work for basic rate taxpayers, HMRC said: “Your total income is £37,710. This is made up of £25,737 from a private pension and £11,973 from your State Pension. In December, you got a £200 Winter Fuel Payment. Your Personal Allowance is £12,570. We’ll reduce your tax free amount by:
- £11,973 (your State Pension)
- 1,000 (1,000 × 20% = the £200 Winter Fuel Payment you need to repay)
“This is your total deductions. £12,570 (Personal Allowance) – £12,973 (total deductions) = –£403 of tax free allowance. Your new tax code is K39. This means you’ll pay extra tax on £399 of income. You’ll pay around £17 more tax per month.”
The repayment rules apply across the UK, including Scotland, where the benefit is paid as the Pension Age Winter Heating Payment, and Northern Ireland, where payments were made by the Department for Work and Pensions on behalf of the Northern Ireland Executive. In every case, HMRC is responsible for recovering payments from those whose income exceeds the threshold.
Only pensioners who received the payment and earned more than £35,000 without opting out are required to repay it.
