Millions of pensioners may owe HMRC £300

Up to two million pensioners could be hit with a surprise £300 tax bill as HMRC moves to reclaim Winter Fuel Payments. From November, the £200–£300 winter fuel payment will still be paid automatically to people aged 66 and over to help with heating bills.

But under new rules, pensioners earning more than £35,000 a year will no longer be eligible. Rather than withholding the cash up front, the Treasury will pay everyone first - and then claw back the money later through the tax system.

HMRC confirmed that repayments will not be taken directly from bank accounts, easing fears among pensioners worried about surprise deductions. Dan Whitworth, financial journalist for BBC Radio 4’s Money Box, said: “That money will not be taken from bank accounts. Instead, HMRC will reclaim it through tax.”

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The clawback will take place automatically through the Pay As You Earn (PAYE) system, with small deductions made from pension or salary payments between April 2026 and April 2027. Those who complete Self Assessment tax returns will see the repayment added to their 2025–26 tax bill, due by January 31, 2027. Paper filers must include the payment by October 31, 2026.

An HMRC spokesperson said: “The vast majority of people who need to pay back a Winter Fuel Payment will do so automatically via their tax code. For those already registered for Self Assessment, it will be collected via their tax return.

“We’ve provided online guidance clearly explaining how recovery of payments works, and a calculator so people can see if they’ll need to pay back the payment.”

Mr Whitworth added that the system would change again in 2027, saying: “HMRC plans to collect two payments that year – one to recover overpaid support from 2026 and another in advance for 2027. Meaning some people could see deductions of up to £600 across the year.

“The government says this approach helps avoid delays in recouping overpayments and ensures the system stays up to date.”

Those expecting to breach the £35,000 threshold will be able to opt out of receiving the 2026 payment altogether. Applications to decline the payment will open on April 1, 2026, via gov.uk or mygov.scot.

Around 7.4 million pensioners will continue to receive the Winter Fuel Payment under the revised scheme, after Labour partially reversed an earlier plan to restrict it only to those on pension credit or other low-income benefits. However, the latest changes mean that millions of middle-income retirees will effectively have to repay the money later through the tax system, leaving some facing a double deduction in 2027.