HMRC is sending updated tax codes to state pensioners who exceeded the earnings limit for the Winter Fuel Payment. These letters began going out in June.
The Winter Fuel Payment (£200 – £300 depending on age) was paid to everyone, but around two million pensioners who earned above £35,000 must now repay it via tax adjustments.
Pensioners will receive a letter or HMRC app notification when their tax code changes. HMRC will review tax paid versus tax due, and if the full amount cannot be collected, they will issue a tax calculation afterwards.
HMRC will automatically reclaim the payment by adjusting PAYE tax codes for affected pensioners, unless they file Self-Assessment returns. Pensioners cannot repay early; they must wait for HMRC to collect it through future tax codes.
Repayment will occur in the 2026 – 27 tax year, recovering the payment made in 2025 – 26. As an example: a £200 payment will mean roughly £17 extra tax per month until repaid.
HMRC says most repayments will be handled automatically through tax codes, while Self-Assessment users will repay via their tax return.
