HMRC Confirms Extra Tax Charges for Pensioners: What It Means

Tax Queen

Tax Expert @ Pie

3 min read

HMRC has confirmed that pensioners with an individual income over £35,000 who receive the Winter Fuel Payment will have it automatically clawed back through their tax code over the next two tax years. This affects state pensioners across the UK from the 2026 to 2027 tax year onwards. If this applies to you, you have until 20 September 2026 to opt out.

Does This Affect You?

If you're a pensioner and your income sits above £35,000, this news probably does affect you, and there's a decision to make before then, rather than just a bill to expect later. Here's exactly what's changing, how much it could cost you, and what you can do about it before the deadline.

The charge applies specifically to state pensioners with an individual annual income of more than £35,000 who also receive a Winter Fuel Payment. The Department for Work and Pensions pays this out between £100 and £300 each November to help with heating costs during winter. It's worth being clear that this is an individual income threshold, not a household one, so couples are assessed separately even if they share finances.

If your income is above that threshold, HMRC will take the payment back through your tax the following year rather than letting you keep it. If you're not sure whether your total income, including your state pension, any private pension, savings interest, or part-time earnings, crosses that line, our guide on common state pension tax mistakes explains how HMRC works this out and where people often get caught out.

How The Charge Works

For payments received in both the 2026 to 2027 and 2027 to 2028 tax years, HMRC won't recover the money as it's paid. Instead, it will collect both years' worth of Winter Fuel Payments together, through one tax code change applied in the 2027 to 2028 tax year.

In practice, that means the deduction lands later than the payment itself, which can catch people off guard if they've already spent it or forgotten about it by the time the adjustment appears.

From the 2028 to 2029 tax year onwards, the process changes. HMRC will instead adjust your tax code in the same year you receive the payment, so the deduction happens sooner and closer to when the money lands.

If You File Self Assessment

If you complete a Self Assessment tax return and file online, HMRC will add the Winter Fuel Payment to your return automatically as a tax charge, so you shouldn't need to do anything extra.

If you file a paper return, though, the responsibility shifts to you: you'll need to add the payment yourself and settle it through your Self Assessment bill for the year you received it. Getting pension income right on your return matters more than most people realise, and our piece on reporting state pension income through Self Assessment covers exactly where these figures belong on the form.

How Much You Could Pay

The amount you're charged depends on how much you received. HMRC has given a working example: for a typical Winter Fuel Payment of £200, pensioners affected by the 2027 to 2028 tax code change can expect to pay around £33extra per month once the adjustment kicks in.

If you received the higher end of the payment, closer to £300, expect the monthly deduction to be higher too, since it's simply the total owed spread across the tax year. Keeping track of exactly what's being deducted and why is easier with the right tools, which is one of the reasons pensioners with Self Assessment obligations use software like Pie Tax to stay on top of their tax position.

How To Opt Out

If you'd rather avoid the clawback altogether, you can opt out of the Winter Fuel Payment as long as your income is over £35,000. The deadline is 11.59pm on 20 September 2026 if you opt out online, or 6pm on 18 September 2026 if you call the Winter Fuel Payment helpline instead.

Opting out won't affect your State Pension in any way, and you won't need to repeat the decision every year: once you've opted out, you simply won't receive the payment in future years unless you actively choose to opt back in. You can read why Pie Tax is worth using if you want a simpler way to track decisions like this alongside the rest of your tax affairs.

What This Means Going Forward

This isn't a one-off change. It's part of how HMRC is now handling the Winter Fuel Payment for higher-income pensioners on an ongoing basis, and the 2028 to 2029 shift to same-year tax code adjustments suggests HMRC is trying to streamline the process for years to come.

For pensioners who also have self-employment income, rental income, or other reasons to file Self Assessment, it's another figure to factor into your annual planning. Seeing exactly how Pie Tax works can help if you want a clearer view of how payments like this interact with your wider tax return.

Final Thoughts

If you're above the £35,000 threshold and would rather not deal with a delayed tax code adjustment, opting out before the September deadline is the simplest route. If you'd rather keep the payment and let HMRC collect it automatically, just be aware of when the deduction will land so it doesn't come as a surprise.

You can find out more about the team behind Pie Tax on our about us page, and if you're ready to make Self Assessment and pension income easier to manage, you can get started with Pie today.