Winter Fuel Payment
Updated: Sep 16
Update – September 2026: The Winter Fuel Payment rules remain broadly as described below, but HMRC has changed how and when payments will be recovered from people with income over £35,000. We’ve explained the latest position here.
The Winter Fuel Payment has received a lot of publicity over the last 12 months. Soon after being elected, the Government announced last summer that it would only be paid to those in receipt of certain means-tested benefits.
Following much criticism and almost a year later, we saw a u-turn. It was announced that bar a few exceptions, anyone living in England and Wales, born before 22nd September 1959 with income of less than £35,000, would receive the benefit.
What is the Winter Fuel Payment?
This is a tax-free annual lump sum to help with heating costs. For winter 2026/27, you may be eligible if you were born on or before 27 June 1960. Most eligible people receive it automatically in November or December, and you’ll usually receive a letter beforehand confirming the amount.
How much might you receive?
£200 if you're aged 66–79
£300 if you’re 80 or over
The amount may vary slightly depending on household arrangements.
What’s changed?
If your income is above £35,000, you’ll still receive the payment automatically, but HMRC will recover it — either through your tax code or Self‑Assessment tax return. However, this is a bit messy, so you can elect not to receive it in the first place, rather than having to pay it back.
What counts towards the £35,000 income threshold?
The key figure is your total income for the tax year. Broadly, this includes the income you receive before deductions, although not everything you receive counts. Here’s an outline of some of the most common items:
✅ Income that counts:
State Pension
Private pensions
Employment income
Self‑employed income
Interest from savings (unless in an ISA)
Dividend income from investments (unless in an ISA)
Taxable benefits, such as Carer's Allowance or Bereavement Allowance
Rental income (after expenses)
Chargeable gains from investment bonds
❌ Income that does not count:
Pension Credit
Attendance Allowance
Interest or dividends in an ISA
Premium Bond winnings
The Winter Fuel Payment itself
Capital gains from selling shares or property
Pension tax free cash
Withdrawals of capital from savings or investments
Marginal cases
It will be especially important to look carefully at the total income where it is close to the threshold. In some cases, it may not be possible to determine eligibility before the end of the tax year, due to variable amounts of dividends, interest etc which may cause the threshold to be breached. In which case it might be better to receive the payment and repay if necessary. If you opt out and later discover that your income was below the threshold, you can opt back in. For winter 2026/27, you would need to contact the Winter Fuel Payment Centre by 31 March 2027.
A few examples
Stephen
State Pension: £12,000
Private Pension: £10,000
Savings Interest (outside an ISA): £1,500
Total taxable income: £23,500
✅ He keeps the full Winter Fuel Payment.
Jane
State Pension: £24,000
Dividends from investments (not in an ISA): £11,500
Total taxable income: £35,500
❌ She's over the limit. She’ll still receive the payment, but HMRC will recover it through tax deductions or via her tax return.
What happens if you’re over the threshold?
If your total income is above £35,000, HMRC will recover an amount equal to the Winter Fuel Payment you received.
If you pay tax through PAYE, HMRC will normally do this automatically by adjusting your tax code. During the transition to the new system, some people may see tax code changes from January 2027 and could temporarily have two years' Winter Fuel Payments being recovered at the same time. We've explained this in more detail in our September 2026 update here.
If you complete a Self Assessment tax return, the Winter Fuel Payment should be included on your return for the year in which it was received. HMRC expects this to be pre-populated for most people filing online, although you should check that it is correct.
What If You Don’t Need It?
Regardless of the income threshold, if you don’t need the support, you have two meaningful options:
1. Donate it
Some people choose to pass it on to charity — especially those supporting older or vulnerable people during winter. It’s a generous way to share the warmth.
2. Opt out entirely
You can choose not to receive the payment at all. This simplifies things if you don’t want HMRC recovering it later.
For winter 2026/27 the deadlines to opt out are 6pm on 18 September by telephone or 11:59pm on 20 September 2026 online. Once you opt out, you remain opted out in future years unless you choose to opt back in.
Summary
Your Circumstances | What Happens | What You Might Consider |
Income £35,000 or less | You keep the full payment | No action needed |
Income above £35,000 | Payment recovered by HMRC via tax | Review your tax code or return. Alternatively, opt out |
You don’t need the payment | You may still receive it, depending on your income | Donate or opt out |
It's good to see the Winter Fuel Payment has been reinstated for those most likely to need it, but this has brought additional complexity in determining whether you're entitled to it, and having to repay it if your income is over the threshold.
Let us know if you’d like to check your income or talk anything through — we’re always happy to help.
Best wishes,
Michael Roberts FPFS
Chartered Financial Planner and Director
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