Around 9m pensioners are set to receive the Winter Fuel Payment this winter to help them cover energy costs, following a major government U-turn.
The Chancellor Rachel Reeves announced last summer that the Payment, which used to be available to all pensioners regardless of their income, would, with effect from last winter, only be offered to those claiming certain means-tested benefits. This meant that more than 10m pensioners lost out on the payment, worth up to £300.
However, the government has now back-tracked on this decision, pledging that all pensioners with an income of £35,000 or less, equivalent to 9m people or 75% of the pensioner population, will now qualify for the Payment.
Joanna Elson CBE, chief executive at Independent Age, said: “While the changes to the Winter Fuel Payment are positive, they are not a silver bullet that will end pensioner poverty. Around 2m older people still live in poverty, and measures must be taken to ensure the long-term financial security of all people in later life. There needs to be a cross-party consensus on the adequate income needed in later life to avoid financial hardship. Once this is established, every older person should be supported to receive this amount. Nobody should have to live in poverty as they age.”
Here, we explain how the Winter Fuel Payment works, what the changes mean for you, and what happens if you earn above the £35,000 threshold.
What is the Winter Fuel Payment?
The Winter Fuel Payment is a one-off, tax-free payment each year designed to help people cover the cost of higher heating bills during the colder months
If you were born before 22 September 1959 you could get either £200 (if aged under 80) or £300 (if aged over 80) from the Winter Fuel Payment to help you pay your heating costs for winter 2025 to 2026, providing your income is lower than £35,000. If you get your State Pension or other benefits paid into your bank account, that’s how you’ll receive your Winter Fuel Payment too, and you should receive the money in either November or December.
As well as your income needing to be below the £35,000 threshold, you’ll only be eligible for the Winter Fuel Payment provided you’ve been living in the UK for at least one day between September 15 and September 21 this year.
Find out more about making a claim and the information you’ll need to provide here.
What if my income is over £35,000?
You’ll still receive the Winter Fuel Payment into your bank account, but the government will claw back the amount you’ve been given in tax.
A spokesman for Gov.uk said: “Pensioners above the £35,000 threshold will have the full amount of the Winter Fuel Payment they received automatically collected via Pay As You Earn (PAYE), or via their Self-Assessment tax return. No one will need to register with HMRC for this or take any further action. Pensioners who want to opt out and not receive the payment at all will be able to do so, with details to be confirmed.”
Why has the government changed its mind?
There was a huge backlash following the government’s announcement last summer that the payment would only go to pensioners claiming benefits, especially as living costs have soared in recent years, leaving many struggling to make ends meet.
Energy bills in particular have increased sharply, and although the price cap is set to reduce in July, they remain much higher than in previous years.
Labour suffered a number of losses in local elections last month, which may have triggered the rethink, despite the prime minister, Keir Starmer, promising straight after the elections that there would be no reversal in the Winter Fuel Payment policy.
The Chancellor Rachel Reeves said: “Targeting winter fuel payments was a tough decision, but the right decision because of the inheritance we had been left by the previous government. It is also right that we continue to means-test this payment so that it is targeted and fair, rather than restoring eligibility to everyone, including the wealthiest.
“But we have now acted to expand the eligibility of the winter fuel payment so no pensioner on a lower income will miss out. This will mean over three-quarters of pensioners receiving the payment in England and Wales later this winter.”
The changes will set the government back £1.25 billion, whilst means-testing the Winter Fuel Payment will save around £450m.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The partial U-turn on the winter fuel payment will make a huge difference to the finances of some of the lowest earning pensioners, who had missed out by a hair’s breadth by earning fractionally too much to qualify for Pension Credit. They will now be able to budget for a warmer winter and a less painful squeeze on their finances as the cold nights draw in.
“They’ll also be getting a warm glow from the fact they may have a couple of small cuts in the energy price cap to look forward to between now and then, which should make for a more comfortable winter all round.”
Despite the changes, many pensioners may still find it difficult to cover costs. If you’re worried about making ends meet, you might find some useful tips in our articles The energy bills crisis: what can you do about soaring costs? and Get help with your bills.
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