Opt-out deadline for Winter Fuel Payment has passed; HMRC to recover payments from higher earners

The deadline to opt out of this winter’s Winter Fuel Payment (WFP) has passed, meaning payments will be made automatically to eligible pension-age households and then recovered from those with taxable incomes of £35,000 or more, authorities and tax experts said.

Ministers closed the opt-out window at midnight on Monday, Sept. 15. The Treasury plans to make the WFP for 2025/26 to everyone who qualifies, then recover the amount from households deemed ineligible under this year’s rules. The scheme reversal earlier this year restored payments for most pensioners after plans to restrict the benefit prompted public outcry.

Under the current rules announced by the Treasury for England and Wales, the WFP is worth £200 per household, or £300 if someone in the household is aged 80 or over. Some 9 million pensioners — more than three-quarters of those living in England and Wales — are expected to receive the payment this year. An estimated 2 million individuals over state pension age in England and Wales with taxable incomes above £35,000 will not be allowed to keep the payment if they did not opt out before the deadline.

Tax officials have set out how the money will be reclaimed. HM Revenue & Customs will typically recover the payment by adjusting a recipient’s tax code, reducing future take-home pay for those on Pay As You Earn (PAYE). Where there is no PAYE income, HMRC will issue a bill. Individuals who complete self-assessment will have the recovery added to their tax return, although HMRC has said pensioners will not be required to register for self-assessment solely because of the WFP clawback.

Heather Rogers, a tax expert and founder of Aston Accountancy, said taxable income is assessed on a gross basis, before personal or tax-free allowances are deducted. "When working out whether you are over £35,000 or not, you should add up your pensions and all other income on which tax is payable, but not then deduct your tax allowances," she said.

The household nature of the payment means that, in a couple where one partner’s taxable income exceeds £35,000, only that partner’s share of the household payment will be clawed back. That will be £100 in households where the full payment is £200, or £150 where the full payment is £300.

Pensions columnist Steve Webb noted concerns about estates and recently deceased beneficiaries. The government has said that if a recovered WFP would be the only outstanding tax liability following a recipient’s death, HMRC will not seek to collect it. However, if the payment forms part of a wider outstanding income tax bill, it will be included in the total amount pursued.

Opting out for the 2025/26 payment is no longer possible, but people who previously opted out can opt back in if their circumstances have changed. Those who want to opt in must contact the Winter Fuel Payment Centre by March 31, 2026. The option to opt out again for the 2026/27 winter will reopen in April next year.

Officials and consumer advisers also urged caution about scams. There have been widespread reports of fraudulent text messages and other approaches falsely claiming to be from the Department for Work and Pensions or HMRC asking recipients to apply for or confirm Winter Fuel Payments. Pensioners were advised not to respond to unsolicited texts or provide personal or financial information to callers claiming to handle the WFP.

The Treasury’s announced rules apply to England and Wales; Scotland operates its own Pension Age Winter Heating Payment scheme, and Northern Ireland has separate arrangements. Pensioners uncertain about their eligibility or concerned about possible recovery should consult HMRC guidance or the Winter Fuel Payment Centre and avoid sharing personal information in response to unsolicited communications.