Winter Fuel Payment Updates

Tax Changes and Opt-Out Options for 2025/26

In June 2025, the government announced that, for 2025/26 onwards, winter fuel payments will be made to all pensioners in England and Wales. However, the payments made for 2025/26 will be recovered in full by HMRC from pensioners with total income of more than £35,000. For those on higher incomes, there will be an option to decline the payment to avoid future tax adjustments.

The Winter Fuel Payment is available to those who have reached State Pension age, and for the 2025/26 tax year, this means individuals born on or before 21 September 1959. The amount payable will be between £100 and £300, depending on individuals’ dates of birth and whether the benefit is a joint claim.

What is the Tax Treatment for Pensioners with Higher Incomes?

Previously, the Winter Fuel Payment was entirely tax-free. However, from 2025/26, those with taxable income exceeding £35,000 per year will see the payment recovered through the tax system via the following methods:

• HMRC will adjust tax codes in the 2026/27 tax year to collect the amount due, spreading the repayment over the following tax year.
• For self-assessment taxpayers, the payment must be declared on your 2025/26 tax return.

The full winter fuel payment will be recovered even if total income exceeds the threshold by a small margin.

Can I opt out of receiving the Winter Fuel Payment for 2025/26?

Eligible recipients can opt out of receiving the payment. This may be beneficial for those above the income threshold who wish to avoid the administrative process of repayment.

The deadline for opting out for winter 2025/26 is 15 September 2025. If you change your mind, it is possible to opt back in by contacting the Winter Fuel Payment Centre before 31 March 2026.

Opt-out requests can be made:

• Using the online form on  GOV.UK
• By contacting the Winter Fuel Payment Centre via phone, post, or email. Further information can be found here.

If you require assistance in the preparation of your self-assessment tax return to include the repayment of this payment, please contact your local Perrys office and we will be happy to help.