£300 deduction for UK pensioners: Who will be affected as Government looks to reclaim Winter Fuel Payment
The Government is planning to recoup millions of pounds in overpayments made to pensioners - here’s who will be affected.
Pensioners are being warned over Government plans to reclaim a £300 overpayment. It is understood the scheme will affect around 2 million people.
Letters are expected to be sent out this month explaining the changes to the Winter Fuel Payment and who should expect their bonus cash to be reclaimed. In June, the Government amended plans to limit the payment to only those claiming pension credit, instead restoring it to anyone with an income of under £35,000 a year.
Those with an income above the £35,000 threshold will also receive the payment, but it will then be reclaimed from them in tax. Pensioners who do not want to receive the payment are able to opt out.
At the time of the U-turn, Chancellor Rachel Reeves said: “I don’t think it is right that the very richest pensioners have their fuel bills subsidised, but this year nine million pensioners will get the winter fuel payments.”
Some two million pensioners who earn more than £35,000 will see their winter fuel payments clawed back via the taxman, the Treasury estimates.
What is the £300 deduction for pensioners?
The Winter Fuel Payment scheme, designed to help older people with the cost of heating during the colder months, is usually paid into bank accounts automatically which means those no longer eligible for the cash will need to pay it back.
For those exceeding the threshold for the payment, HMRC plans to reclaim the money through the tax system. Managed through existing tax arrangements, the money will be returned through Pay As You Earn (PAYE) deductions or through adjustments to tax bills for those who complete a Self Assessment return.
To make the repayment more manageable for PAYE recipients, the cost will be spread across the year at around £25 per month. Estimates suggest around 2 million pensioners will be affected by the repayment scheme.
For those who know their income will exceed the £35,000 threshold, there is the option to opt out of the WInter Fuel Payment, although the deadline for this winter's payment has now passed. However, pensioners will be able to opt out of the 2026/27 payment and all future payments via post, phone, or online from April 1, 2026.