How does Rest Less make money
We make money through advertising and commission from affiliate links, which enable us to offer Rest Less as a free service to our users. The content on this page may use affiliate links, which track traffic from our website to a third party provider and enable us to receive a commission or payment from any traffic we refer.
* Affiliate links on this page have an * next to them. We place enormous importance on our editorial independence and the integrity of our content which means that we will never change how we write about something as a result of an affiliate link.
Pensioners with annual income higher than £35,000 a year will have the full value of their Winter Fuel Payment reclaimed through the tax system unless they opt out before 15 September this year.
The Winter Fuel Payment provides individuals who are over State Pension age with a cash payment of £200 for the year, rising to £300 for those over the age of 80, to help them with heating costs during colder months.
However, for the current 2025/26 tax year only pensioners with taxable income of less than £35,000 a year will be eligible. If your income is higher than this, you’ll still receive the payment, but the taxman will claw it back either through your tax code or via your self-assessment tax return if you file one.
Here, we explain how the Winter Fuel Payment works, why you might want to opt out before the deadline, and how to go about it.
How does the Winter Fuel Payment work?
After a u-turn earlier this year, the Government announced that from winter 2025, a wider group of older people will be eligible for Winter Fuel Payments, rather than just those on means-tested benefits. You can find out more in our article 9m pensioners to get Winter Fuel Payment. The tax-free Payments are typically made automatically to individuals over State Pension age.
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, 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, 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.
While the expansion of the scheme will allow an estimated 9m pensioners to receive support, the Government has introduced a clawback mechanism for higher earners. Specifically, anyone with income above £35,000 per year will have the full value of their Winter Fuel Payment reclaimed through the tax system.
Although the Department for Work and Pensions is not responsible for Winter Fuel Payment policy in Scotland and Northern Ireland, the same rules will apply to the Pension Age Winter Heating Payment in Scotland and Winter Fuel Payments in Northern Ireland.
Who will have to repay the Winter Fuel Allowance?
Anyone who has a total income above the £35,000 threshold will be subject to a tax charge equivalent to the full amount of their Winter Fuel Payment, unless they opt out of receiving the Payment. This income includes the State Pension, private pensions, and any other taxable income.
For example, if an individual receives a payment of £300 and their income is above the threshold, they will be charged an additional £300 in income tax. If you want to find out whether your payment will be taken back, HMRC has provided a calculator to help which you can find here.
The Department for Work and Pensions (DWP) will report annually to HMRC on who has received Winter Fuel Payments and the amounts paid. HMRC will then apply the tax charge where applicable.
This tax charge will then be recovered either through your annual tax return if you complete one, or via your tax code.
Tax code example
Louise, 66, automatically receives the £200 Winter Fuel Payment, but her total income is £38,000. Since she doesn’t complete a self-assessment tax return, HMRC will take back approximately £17 every month from April 2026 to March 2027 through her Pay As You Earn (PAYE) tax code.
Self-assessment tax return example
John, 80, has an income of £46,000 a year and completes a paper self-assessment tax return each year. He must remember to declare his £300 Winter Fuel Payment on his return and this money will need to be paid back, along with any other income tax owed, by January 31, 2027. If he completed his tax return online instead, the amount paid to him would be automatically added to his 2025/26 tax return. Again, it would need to be repaid by January 31, 2027.
How do you opt out of the Winter Fuel Payment?
Pensioners who expect their total income for the 2025/26 tax year to exceed £35,000 have the option to opt out of receiving the Winter Fuel Payment altogether at Gov.uk, thereby avoiding the tax charge. The deadline to do this is 15 September 2025.
John Havard, a Consultant at Blick Rothenberg, said: “You can formally opt out on the ‘Opt out of Winter Fuel Payment page’ on the gov.uk website. But you must live in England, Wales or Northern Ireland to do so. The only information you need to have to hand is your National Insurance Number, name, date of birth and address.”
If you need help or prefer to speak to someone, you can contact the Winter Fuel Payment Centre by telephone on 0800 731 0160.
Rest Less Money is on Instagram. Check out our account and give us a follow @rest_less_uk_money for all the latest Money News, updated daily.
Join the discussion
Read our full commenting terms and guidelines