Winter Fuel Payment: What You Need to Know

New guidance has been issued this week clarifying how repayments will work for higher-income recipients.

Will I have to repay the Winter Fuel Payment?

Anyone with total taxable income above £35,000 will now be required to repay the Winter Fuel Payment through the tax system.

Income for this purpose includes:

·       State Pension

·       Workplace or private pensions

·       Earnings from employment or self-employment

·       Savings interest and dividends

·       Rental income

The income limit is based on your total gross income, which is before deductions for pension contributions and Gift Aid. This means these deductions do not help you get below this specific threshold.

How will repayments be collected?

If you file a Self Assessment tax return, the repayment will be added to your tax bill for that year. Those filing online will see the amount included automatically.

If you do not file a tax return, but instead pay tax through PAYE, HMRC will collect the repayment by adjusting your tax code next year. This helps spreads the repayment across the tax year.

Although HMRC receive details of state pensions, UK private pensions and most savings interest, they do not receive information about all sources of income such as income from abroad or dividends from a private limited company.

It is not currently clear if being in receipt of other sources of income will mean you will need to file a tax return to repay the Winter Fuel Payment.

Can you opt out of receiving the Winter Fuel Payment?

Yes - if you expect your income to exceed £35,000, you can opt out to avoid having it reclaimed later. However, the deadline for 2025/26 has already passed.

Need advice?

If you are unsure whether the new rules apply to you or would like help assessing your income position, please contact us. We are here to help.

Further reading:  Gov.uk

Written by Ffion Bainbridge