Winter Fuel Payment
- Michael Roberts FPFS
- Aug 28
- 4 min read
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, paid each winter to those born on or before 21 September 1959. The payment usually arrives automatically between November and December, and you’ll get a letter confirming the amount beforehand. There’s no need to apply if you’re eligible by age and residency.
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 term is taxable income — anything subject to income tax. Here’s an outline 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. So far, we have been unable to confirm whether it can be claimed retrospectively if you opt out and later discover your income was below the threshold.
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?
You’ll still receive the payment this winter — but you’ll have to repay it:
HMRC will adjust your tax code in the following year, meaning small deductions from your normal pension or salary
If you complete a Self‑Assessment return, the money will be added to your tax bill
If you’d rather not receive the payment, you can opt out by:
Calling the Winter Fuel Payment Centre by 12 September 2025 on 0800 731 0160
Complete the opt-out form online by 14 September 2025. You can do this here: https://www.gov.uk/winter-fuel-payment/report-change-circumstances
You can also opt back in later if your situation changes.
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.
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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