Millions of pensioners who received Winter Fuel Payments last year could soon see extra tax deducted from their income as HM Revenue and Customs (HMRC) begins recovering the benefit from those earning more than £35,000.
The scheme applies to state pensioners under the age of 80 who received a Winter Fuel Payment during winter 2025.
Up to two million people across Britain could face automatic deductions from their monthly income.
HMRC said: “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.”
The standard £200 payment for pensioners living alone will be recovered through adjustments to PAYE tax codes over the course of the 2026 to 2027 financial year.
HMRC has published an example showing how the repayment process works for a pensioner paying tax at the basic rate.
The tax authority 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.”
Under this example, the pensioner’s personal allowance of £12,570 is adjusted, resulting in a new tax code of K39.
HMRC to recover Winter Fuel Payments from pensioners earning over £35,000 through tax code changes
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The revised code means the individual pays additional tax on £399 of income.
HMRC said the impact would equate to around £17 a month in extra deductions.
Additional tax payments will be spread across the entire 2026 to 2027 tax year rather than being collected in a single payment.
Only pensioners who earned more than £35,000 and did not opt out of receiving the Winter Fuel Payment will be required to repay it.
Eligibility of Winter Fuel Payment in winter 2024 to 2025 linked to means-tested benefits | DWP
The recovery programme covers the whole of the United Kingdom, including Scotland, Northern Ireland, England and Wales.
In Scotland, the payment is known as the Pension Age Winter Heating Payment, while in Northern Ireland the Department for Work and Pensions (DWP) distributed payments on behalf of the devolved administration.
HMRC is responsible for collecting repayments centrally regardless of where pensioners live.
People completing Self Assessment tax returns online will find their Winter Fuel Payment pre-populated on their 2025 to 2026 return, which must be submitted by January 31, 2027.
Anyone whose payment does not appear automatically will need to add it themselves.
Pensioners filing paper tax returns face an earlier deadline of October 31, 2026, to declare the payment.
HMRC has also warned pensioners to remain vigilant against fraudsters seeking to exploit the repayment process.
The department urged recipients to be cautious of unexpected messages and to report suspicious contact immediately.
HMRC said: “To report a suspicious text claiming to be from HMRC, forward it to 60599. To report a suspicious email, forward it to [email protected]. To report a scam phone call, visit GOV.UK.”
Anyone who believes they have become a victim of financial fraud is advised to contact their bank as soon as possible and report the incident to Report Fraud.
Scottish residents who suspect fraud has taken place are advised to contact police by calling 101.
HMRC’s warning comes amid concerns that fraudsters may seek to take advantage of increased communication surrounding Winter Fuel Payment repayments to obtain personal or financial information from pensioners.