Millions of pensioners are set to receive the winter fuel payment once again later this year, following a controversial modify last winter.
The benefit, which aims to assist older people with the cost of heating their homes during the colder months, was withdrawn from around 10 million people.
In a shift to reverse that decision, chancellor Rachel Reeves has confirmed the payment would be reinstated for pensioners with an annual income below £35,000.
The U-turn has been welcomed by campaigners and charities who warned that many older people were struggling with rising energy costs.
Confutilizingly, those earning above the £35,000 threshold will still receive the payment initially, but it will later be reclaimed in taxes.
Financial experts have since urged pensioners to consider opting out of the scheme before the September deadline to avoid the hassle of a future “tax clawback headache”.
What is the winter fuel payment?
It’s money from the government to assist pensioners pay their heating bills over the winter.
The payment is between £100 and £300, depconcludeing on each person’s circumstances, and will automatically be paid into bank accounts in November or December. People will receive letters before then informing them how much they will obtain and what account it will be paid into.
The winter fuel payment has been one of the most contentious issues for Keir Starmer’s government. Last summer, in one of its first acts after coming into office, it decided to limit the payment to only those who claimed pension credit, aimed at balancing what was described as a £22bn “black hole” in the public finances.
Winter fuel payment recipients by area in 2023/24, the most recent time the benefit was widely available. (PA)
This meant the number of pensioners receiving the payment was reduced by around 10 million: from 11.4 million to 1.5 million. YouGov polling suggested 57% of Britons were against this.
Who is eligible?
Everyone who was born before 22 September 1959, and lives in England or Wales, will receive the winter fuel payment.
Older people in Scotland should be aware that they will no longer receive the winter fuel payment, as it has now been replaced by the pension age winter heating payment.
Most pensioners will receive the payment automatically, but if you have not received the winter fuel payment before or you have deferred your state pension since your last winter fuel payment, then you will necessary to claim.
This can be done by post from 15 September and over the phone from 15 October.
What are the tax implications for people earning £35,000?
The approximately two million pensioners whose annual income is above the £35,000 threshold will also receive the payment if they don’t opt out – though it will be taken back in tax.
The government will take the money back by either modifying their 2026/27 tax code or adding the figure to their 2025/26 self-assessment return.
John Havard, a consultant at tax advisors Blick Rothenberg, has warned that anyone who doesn’t opt out and earns even £1 above £35,000 could face a “tax headache”.
“A ‘wealthier’ individual with an income over £35,000 will be subject to a tax ‘clawback’, where the winter fuel payment they receive is required to be returned to the government,” he wrote in a blog.
Watch: Reeves on pensioners earning under £35k to obtain winter fuel payments
“Given this will be a complex process, and just £1 of income above the £35,000 limit is enough to trigger a clawback, those in favour of a simple life will necessary to opt out.”
He declared the clawback process is “potentially complex” and an “administrative headache”.
Havard also declared people near the threshold should watch out for any tiny increases to their income, such as a pension payment, interest or part-time earnings that could “tip someone over the limit and cautilize them to fall into the clawback process”.
Can you opt out of the winter fuel payment?
People can choose to opt out of the winter fuel payment by contacting the government. This has to be done before 15 September.
To opt out, you can fill in the online form on or before 14 September 2025. Alternatively, you can call the assistline on 0800 731 0160 before 6pm on 12 September 2025.
Further details can be found here.
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