The clawback scheme is for those who are NOT eligible to keep their Department for Work and Pensions ( DWP ) Winter Fuel Payments following recent rule changes.
The winter fuel allowance is worth up to £300 and will enter bank accounts of millions of pensioners in November. But the support is now linked to income so not everyone gets to keep it.
READ MORE Six Christmas items households should buy now to beat inflation – full list
All pensioners are initially handed the cash but it is then taken back from wealthier over-65s in instalments. This happens by cutting monthly pension payments, by £17 for those getting £200 Winter Fuel Payments.
The process was seen as the easiest way of separating those who are and aren’t eligible. This is why some retirees may notice less in their bank accounts than expected.
New qualifying rules announced by former Chancellor Rachel Reeves and the Labour Party Government last year, following a row over cuts to the support.
It used to be universal for all pensioners but now only goes to those with annual incomes below £35,000. The state pension recently went up by up to £575 under the triple lock.
The Government explained: “If your total income is over £35,000, you’ll need to pay back the payment.
“HMRC will automatically collect the payment through your tax code unless you already file self-assessment tax returns.
“This means we’ll change your tax code for the 2026 to 2027 tax year. For a typical payment of £200, we’ll deduct approximately £17 per month.
“In the 2027 to 2028 tax year, we’ll deduct approximately £33 per month for a typical payment of £200.
“This is because we’ll be collecting your payments from 2026 and 2027. It will then return to approximately £17 per month for the 2028 to 2029 tax year.
“If you file your self-assessment tax return online each year, HMRC will automatically include the payment on your 2025 to 2026 tax return as part of your income.”
Certain state pensioners will see their monthly pension payments cut this year under new rules imposed by HMRC. The taxman will be taking cash back from those with incomes over £35,000.
The clawback scheme is for those who are NOT eligible to keep their Department for Work and Pensions ( DWP ) Winter Fuel Payments following recent rule changes.
The winter fuel allowance is worth up to £300 and will enter bank accounts of millions of pensioners in November. But the support is now linked to income so not everyone gets to keep it.
READ MORE Six Christmas items households should buy now to beat inflation – full list
All pensioners are initially handed the cash but it is then taken back from wealthier over-65s in instalments. This happens by cutting monthly pension payments, by £17 for those getting £200 Winter Fuel Payments.
The process was seen as the easiest way of separating those who are and aren’t eligible. This is why some retirees may notice less in their bank accounts than expected.
New qualifying rules announced by former Chancellor Rachel Reeves and the Labour Party Government last year, following a row over cuts to the support.
It used to be universal for all pensioners but now only goes to those with annual incomes below £35,000. The state pension recently went up by up to £575 under the triple lock.
The Government explained: “If your total income is over £35,000, you’ll need to pay back the payment.
“HMRC will automatically collect the payment through your tax code unless you already file self-assessment tax returns.
“This means we’ll change your tax code for the 2026 to 2027 tax year. For a typical payment of £200, we’ll deduct approximately £17 per month.
“In the 2027 to 2028 tax year, we’ll deduct approximately £33 per month for a typical payment of £200.
“This is because we’ll be collecting your payments from 2026 and 2027. It will then return to approximately £17 per month for the 2028 to 2029 tax year.
“If you file your self-assessment tax return online each year, HMRC will automatically include the payment on your 2025 to 2026 tax return as part of your income.”