Government announces expanded Winter Fuel Payment eligibility and new tax charge

The government announced on 9 June 2025 that eligibility for the Winter Fuel Payment would be expanded from winter 2025 to include pensioners with total incomes below or equal to £35,000, alongside a new charge for pensioners with total income over £35,000¹. The Department for Communities in Northern Ireland announced the same change to the means test on 10 June 2025³.

The charge equals the full value of a Winter Fuel Payment, or a Pension Age Winter Heating Payment in Scotland, received by pensioners with total income over £35,000¹. The payments themselves are not being made taxable and the amount received is not affected; it continues to be paid in full, though pensioners can elect to opt out¹. Legislation will be introduced in Finance Bill 2025-26 to apply the charge under Part 10 of ITEPA 2003, using total income as defined in Section 23 of the Income Tax Act 2007¹. The measure takes effect from 6 April 2025 for winter payments made in winter 2025¹.

HMRC will collect the charge automatically through PAYE tax codes unless the pensioner already files a Self Assessment return¹. For 2026 to 2027, a typical £200 winter payment means about £17 a month deducted from a PAYE customer; in 2027 to 2028 deductions temporarily rise to about £33 a month because HMRC will recover both the 2026 and 2027 winter payments in that year, returning to about £17 a month from 2028 to 2029¹. Pensioners receiving certain social security benefits in the qualifying week are not liable to the charge regardless of income: income support, income-based jobseeker's allowance, pension credit, income-related employment and support allowance and universal credit¹.

The regulations make payments universal in England and Wales, raising the numbers entitled from 1.5 million to 10.9 million, with around 2 million recovered through the tax system and around 9 million pensioners net beneficiaries². In Northern Ireland, numbers entitled rise to approximately 336,000, with around 48,000 recovered and around 288,000 net beneficiaries³. HMRC estimates the charge affects approximately 2.2 million individuals, of whom about 1.3 million are PAYE only and 900,000 are in Self Assessment, including around 800,000 who also have PAYE income¹. The qualifying week for winter 2025/26 was 15 to 21 September 2025, and claims may be made up to 31 March following it².

The Scottish Government withdrew regulations on 18 June 2025 and said all pensioners with income of less than £35,000 would receive Pension Age Winter Heating Payments of either £203.40 or £305.10 per household depending on age⁴. The UK-wide charge applies following announcements by the Scottish Government and Northern Ireland Executive¹. Winter Fuel Payments will not be made outside the United Kingdom; provisions for payments in the EEA and Switzerland expired on 1 April 2025².

Why it matters for households

Pensioner households in England, Wales and Northern Ireland receive a payment from November 2025 by default, with letters issued after the qualifying week². Those with total income above £35,000 have the full amount recovered through their tax code or Self Assessment return, so the net position for that group is unchanged from receiving nothing, but the money moves through their tax affairs rather than being withheld¹. Around 9 million pensioners in Great Britain and around 288,000 in Northern Ireland are net beneficiaries². The Work and Pensions Committee noted that Pension Credit take-up has remained at around two thirds of those eligible for around ten years, with 700,000 households eligible but not claiming⁴. The Joseph Rowntree Foundation described the change as a "partial reversal of the cuts to Winter Fuel Payments", meaning it will again be available for all individuals with incomes under £35,000 per year⁵.

What happens next

Legislation will be introduced in Finance Bill 2025-26¹. The tax recovery provisions will be included in the Finance Bill to be introduced in Autumn 2025². Deductions begin in the 2026 to 2027 tax year, rise temporarily in 2027 to 2028, and return to the lower level from 2028 to 2029¹.