Winter fuel payments land in bank accounts

Sara White, Editor, Business & Accountancy Daily. Croner-i

Not all the nine million pensions receiving a winter fuel payment into their bank accounts from this month will be able to keep the benefit as it will be taxable for several millions.

Following the chancellor’s decision to u-turn on the government’s original decision to abolish winter fuel payments in July 2024, a new £35,000 income threshold now defines who is eligible for the tax free payment.

But there is a big caveat – pensioners had to opt out of the payment by notifying HMRC by 15 September deadline or it would be paid automatically regardless of their financial position.

If they did not do so, HMRC will claw it back in full through their self assessment tax return in 2025-26 or tax code from April 2026.

John Havard, a consultant at Blick Rothenberg, said: ‘The default is that any age qualified individual will receive the winter fuel payment. But a “wealthier” individual with an income over £35,000 will be subject to a tax claw back. This will be a complex process, and just £1 of income above the £35,000 limit is enough to trigger a clawback.’

Pensioners across England and Wales born before 22 September 1959 will be paid automatically. They will receive between £100 and £300, with payments being made automatically throughout November and December. Different payment system operates in Scotland and Northern Ireland.

HMRC has issued guidance on how to pay back the winter fuel payment if pensioner is over £35,000 income threshold. It also has a easy online tool to check eligibility, with lots of options to ensure additional income is calculated into the mix. The official HMRC online winter payment checker tool is available on gov.uk.

Anyone with income over £35,000 will lose their payment as it will be clawed back by HMRC.

In the guidance, HMRC stressed: ‘If you live 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 you earn £36,000 and your partner earns £22,000, we’ll take back your payment, but your partner will keep their payment.’

Once again, scammers are taking advantage of the situation, with confusion after the removal and reinstatement of the benefit for majority of pensioners.

As payments begin, pensioners are being urged to continue to look out for these scam messages and remember that they will never be asked to provide bank details to receive the payment. Anyone who receives a text message inviting them to apply for a payment should ignore it totally, and never click on links. Report the scam email by forwarding it by text message to 7726. 

Torsten Bell, minister for pensions said: ‘Nine million pensioners across England and Wales will benefit from the winter fuel payment hitting their bank account. Payments are being made automatically throughout November and December.

‘Do remember to stay alert to scam texts, the government will never ask you to share personal information or click on links to claim your payment.’Scams targeting pensioners are up 150% in the last few months, according to the Department for Work & Pensions (DWP). In these scams, fraudsters pose as government officials or payment providers in an attempt to trick people into sharing their personal information.