HMRC offer guide on whether WFP will be taxed

Many older people are worried that the rise in the State Pension on 6th April will see their income rise above the UK tax threshold for the first time.

NPC members have specifically questioned what this will mean for their Winter Fuel Payment if it was automatically paid into their accounts.

HMRC contacted NPC 'as a trusted voice' to offer a guide on what this is likely to mean for recipients of the WFP. If you still have questions, please find HMRC contacts and links for further information in the article below.

Recovery of 2025 Winter Fuel Payments 

If a customer’s total individual income for the 2025-26 tax year is:  

·       £35,000 or less — they will keep their 2025 Winter Fuel Payment 

·       more than £35,000 — HMRC will take back their 2025 Winter Fuel Payment  

If the customer lives in a household with someone else who has also received a payment, we’ll look at each person’s individual income separately. For example, if Person A earns £36,000 and Person B earns £22,000, HMRC will take back the payment from Person A, but Person B will keep their payment.  

HMRC have also provided a calculator on GOV.UK to help customers work out if their total income will be over £35,000. The calculator also tells customers how the payment will be recovered.  

Recovery for PAYE customers 

HMRC will automatically collect the payment through a change to the customer’s tax code from April 2026, unless they already file a Self Assessment tax return.  

This means we’ll change the customer’s tax code for the 2026 to 2027 tax year. For a typical payment of £200, we’ll deduct approximately £17 per month.  

They don’t need to do anything or call HMRC. 

Please note: In February 2026 customers may receive a notification of their tax code for the 2026 to 2027 tax year which does not yet include adjustments for their winter payment. They do not need to take any action or call HMRC. They should receive an updated tax code, which reflects recovery of their winter payment, in early April 2026.  

Recovery for Self Assessment customers 

HMRC will collect their payment through their Self Assessment tax return for 2025 to 2026.  

For online filers, where possible HMRC will include the 2025 payment on their online Self Assessment return which is due by 31 January 2027. It will show as either a Winter Fuel Payment charge or Pension Age Winter Heating Payment charge. Customers should check their winter payment is on their online return and include it themselves if not.  

Paper filers will need to include it on their paper return, which is due by 31 October 2026.  

Opting out of future payments 

Anyone who expects their total individual income from their private pension, state pension and any other sources to be over £35,000 can opt out of future payments rather than HMRC take them back. 

Customers in England, Wales and Northern Ireland can opt out of receiving future winter payments via DWP’s online form on GOV.UK from 1 April 2026. 

Customers in Scotland should contact Social Security Scotland by phone if they want to opt out for future years. Further guidance is available on mygov.scot. 

Further information and support 

An explainer video outlining how Winter Fuel Payments or Pension Age Winter Heating Payments will be recovered is available on HMRC’s YouTube channel. 

Further information on HMRC’s recovery approach can be found on GOV.UK.  

General information on Winter Fuel Payments can be found at www.gov.uk/winter-fuel-payment or for Pension Age Winter Heating Payments at www.mygov.scot/pension-age-winter-heating-payment.