New £33 charge for state pensioners ‘double repayments’ warning issued | Personal Finance | Finance

A BBC expert has told people that they could end up paying £33 a month if they don’t take action soon. State pensioners can now opt out of this year’s Winter Fuel Payment – and have been warned if they fail to do so they’ll incur effectively double payback rates.

Winter Fuel Payments, known in Scotland as Pension Age Winter Heating Payments, are annual financial grants of between £2-300 intended to help cover winter energy bills. The government support scheme is designed to assist elderly households with heating costs during the winter months

Payments were issued in November and December last year. The payments are made to every state pensioner in England – but anyone whose total personal income exceeds £35,000 during the relevant tax year must repay the payment in full.

HMRC will automatically claw back the money through your tax code or your Self Assessment return. However the issue for people in the 2026-7 financial year who earn over the threshold and that is the reason one BBC expert has previously suggested people might want to ‘opt out’ now to avoid having to pay it back.

The BBC said the main reason to opt out if you expect your income to stay above the threshold is because from the 2027 to 2028 tax year, HMRC plans to recover payments in advance rather than in arrears, meaning deductions could be roughly double.

For a typical £200 payment, this could mean around £33 a month being taken through the tax system instead of about £17. The deductions are expected to return to the lower monthly amount in the following tax year.

Consumer expert Rebecca Wilcox told BBC Morning Live viewers: “On the topic of early cancellation, she explained: “If you know your personal income is going to be over the threshold of £35,000 then opt out of it for the next year and then you don’t have to worry about the next payment. You cannot do this until 1 April. The reason you’ll want to opt out is because the payments are going to double just for one year.

“This is because the taxman is in debt, he’s in arrears, because he’s paid out all this money and it wants to claw this money back. For one year it is going to charge everybody double on their repayments so it can get back into the normal process of taking the money from you and then returning it. It wants to have its money so for one year it is going to charge you, say you were doing, for example we were talking about, of £17 per month tax deductions, it’s going to charge you double, £34 per month for that one year and then it will go back to £17.

“So that’s why you might want to opt out if you know you’re going to be earning £35,000 and above. If your income then drops just be aware you will have to opt back in to receive the winter fuel payment.”

The Winter Fuel Payment was a lump sum that was paid out to help you with your fuel bills during the cold months of November and December. That’s when the payments were made. What happened was they paid everybody who was over the age threshold. You were eligible to keep it if you were born before 22 September 1959 – that’s for England, Wales and Northern Ireland. Or the 21 September 1959 in Scotland.

“If you’re born before that and you earn £35,000 exactly and under you can keep it. If you earn even a penny over the £35,000 of your personal, taxable income, then you will need to pay back this payment. The payment was between £100 and £300 and that number was calculated on your circumstances, your household circumstances and how old you are.

“For some this is going to be the first they’ve heard about repayment. And there’s a reason that this is happening and it’s because HMRC can do many things but it cannot predict the future. It has no idea how much you’re going to earn in that future tax year. So it’s just given it to everybody and then when it knows how much you’ve earned which is April, it will take back the money that it paid you back in November.

“If you earn over £35,000 and are within the age bracket you will be required to pay this back in full.”,

The amount awarded ranges between £100 and £300 depending on age and living circumstances. HMRC cannot confirm final earnings until the tax year has ended.

Rebecca issued a warning that the repayment process could create an opportunity for scammers: “Fraudsters often send messages pretending to be from government departments asking for personal details or payment.

“HMRC has confirmed the official letters about Winter Fuel Payment repayments will make clear that no action is required and will not ask for personal or financial information.

“If you receive any message asking you to provide details or make a payment in relation to the Winter Fuel Payment, dispose of it.”

HMRC will adjust the individual’s tax code for the 2026 to 2027 tax year. The repayment will show as an underpayment, resulting in marginally higher tax deductions each month. No interest is charged on the sum being reclaimed. For example, someone who received £200 may find their monthly income reduced by roughly £17 while the repayment is collected – but this will rise to £33 this year.

From April 1 2026, households have been able to opt out of the 2026 to 2027 payment by getting in touch with the Winter Fuel Payment Centre or filling out a form online. You will need your National Insurance number to do so.

Once you have opted out, future payments will stop unless you choose to opt back in. For full opt out details click here.