Older people with income over £35,000 may choose not to receive the payment to prevent it being recovered through their tax code.
Pensioners in England and Wales will be able to opt out of the Winter Fuel Payment for 2026/27 from April 1, in a move that could help some avoid a tax bill or adjustment later on. Under rules introduced last year, the annual heating payment is now targeted at those with incomes at or below £35,000.
However, it will be paid automatically, even where someone’s income exceeds that level, unless they opt-out before the deadline in September.
For higher-income pensioners, any payment received will be recovered by HM Revenue and Customs (HMRC), typically through adjustments to their tax code in the following financial year. Opting out means the payment is not issued in the first place, avoiding the need for it to be repaid later.
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The Winter Fuel Payment is worth between £200 and £300 depending on age and circumstances, and is usually paid automatically to eligible households.
Although the amount is based on household eligibility, it is paid to individuals. This means one person in a couple can opt out while the other continues to receive their share, depending on their income.
Last year, some pensioners were unaware they could opt out before the qualifying week in September, meaning they received the payment and later faced it being recovered.
The qualifying week for the 2026/27 payment is typically the third week in September, so anyone wishing to opt out will need to do so before then. The Department for Work and Pensions (DWP) will confirm the exact dates later this year.
Pensioners who opt out but later find their income falls below £35,000 can still make a claim for the payment up to March 31, 2027.
Meanwhile, those who did not receive the Winter Fuel Payment for 2025/26 can still submit a claim before March 31 this year.
Income thresholds and payments
HMRC says the decision is based on a person’s total personal income for the tax year, before deductions. That includes income from a wide range of sources.
These include:
- State Pension
- workplace or personal pensions
- earnings from employment
- savings interest
- dividends from shares
- rental income or self-employment profits
- taxable state benefits
- income from trusts
Where couples both receive the payment, each person’s income is assessed separately.
- For example, if one partner earns £36,000 and the other earns £22,000, HMRC would reclaim the payment from the higher earner while the lower-earning partner would keep theirs.
How the payment will be taken back
Pensioners who do not complete a Self Assessment tax return will have the money reclaimed through their tax code.
HMRC will adjust the tax code for the following tax year so the repayment is collected gradually through PAYE. For a typical payment of around £200, this would mean paying roughly £17 per month in additional tax.
Pensioners who need to pay the money back will receive a letter from HMRC next month (April) explaining the tax code change and how the repayment will be collected.
If HMRC cannot recover the full amount through the tax code during the year, a tax calculation may be issued instead.
What happens if you submit a tax return
Anyone who completes a Self Assessment tax return will repay the Winter Fuel Payment or PAWHP through their normal tax bill.
From the 2025 to 2026 tax year onwards, the payment must be included on the return as a specific “Winter Fuel Payment charge”.
Those filing online may see the charge automatically added to their return, but HMRC says taxpayers should check the figure is included and add it manually if it is missing.
Paper tax returns will require the amount to be entered manually.
HMRC has also published a video on YouTube which can help pensioners understand if they need to pay the payments back.
