The Winter Fuel Payment has traditionally been a reliable helping hand to cover heating costs during the colder months. However, the 2025/26 tax year brings a significant shift that higher-income pensioners need to look out for. For the first time, some recipients will be required to repay this payment back to HMRC.

To help you understand if you are affected and what actions you need to take, we have broken down the changes below.

What is changing with the Winter Fuel Payment for 2025/26?

The core change is the introduction of an income cap. While most pensioners will receive and keep the payment as usual, individuals with higher incomes will now face a clawback mechanism, meaning they may have to pay it back depending on what they earn.

Who exactly will be required to repay the payment?

If your individual income is above £35,000, you will need to repay your Winter Fuel Payment.

It is vital to note that this is assessed on an individual basis, not per household. If you are a couple, your incomes are looked at separately. This means one person in the household might have to repay their portion if they earn over the threshold, while their partner keeps theirs.

Is there a sliding scale if I am only just over the £35,000 limit?

No. The £35,000 threshold is strict, and there is no taper.

The Danger Zone: If your income is £35,001, you will be required to repay the Winter Fuel Payment in full. Because there is no gradual sliding scale, crossing the line by even a few pounds triggers the exact same repayment as someone earning significantly more.

How will HMRC claw this money back from me?

How you repay depends entirely on how you currently pay your tax:

• If you file a Self Assessment tax return: The repayment will be calculated as part of your 2025/26 tax return. It will be bundled into your final tax bill, which is due by 31 January 2027.
• If you are on PAYE (tax deducted from wages/pensions): HMRC will automatically adjust your tax code during the 2026/27 tax year. This allows them to recover the money gradually from your monthly pension or wage payments.

“I think my income will be right on the line. Is there anything I can do about it?”

Yes, and this is where proactive planning is essential. Because the threshold is so rigid, reducing your taxableincome back below £35,000 could save you from having to repay the benefit at all.

You should review your income now and look into utilising legitimate allowable deductions. Strategies like making pension contributions or utilising Gift Aid donations can effectively lower your net income for the year, potentially pulling you safely back under the £35,000 mark.

Key Takeaway: Don't get caught out by a surprise bill

For the majority of pensioners, nothing changes. However, if you are a pensioner with multiple income streams, a part-time job, or a strong investment portfolio, you need to prepare for potential Self Assessment or PAYE adjustments. Acting early and adjusting your income strategy now can prevent an unexpected tax bill further down the line.

Unsure how your income is tracking for the 2025/26 year?

Get in touch with the Towers & Gornall team. We can review your allowances, assess your potential liability, and help you structure your income efficiently to avoid unnecessary clawbacks.