HM Revenue & Customs (HMRC) has confirmed that some state pensioners will face an additional monthly tax charge of around £17 as part of the recovery of the Winter Fuel Payment, depending on their income. The change relates to the rules governing the Winter Fuel Payment (and in Scotland, the Pension Age Winter Heating Payment), which is a seasonal payment designed to help older people with heating bills. Under the updated approach, the payment is no longer fully kept by all recipients and may be recovered by HMRC if a pensioner’s income exceeds £35,000 in the relevant tax year.

HMRC has said that individuals with a total annual income of £35,000 or less will keep the payment in full. However, those earning above that threshold will have the payment taken back through the tax system.

This is not collected as a one-off bill. Instead, it is recovered automatically by adjusting the recipient’s tax code in a later tax year. This means pensioners will pay slightly more tax each month rather than repaying the money as a single lump sum. For those with an income above the £35,000 threshold who received a typical Winter Fuel Payment of around £200, this works out at roughly £17 extra in tax per month over the year.

HMRC said: “For a typical Winter Fuel Payment of £200, PAYE customers with income more than £35,000 will pay approximately £17 per month extra in tax during the 2026 to 2027 tax year to recover their payment.”

The extra tax charges started in April. Households should have received a letter or email notification from HMRC confirming the change to your tax code to take back the Winter Fuel Payment.

For most, the payment will be recovered through a change to their PAYE tax code from April 2026 with no need to contact HMRC. For those in Self Assessment who file online, the payment should be pre-populated in their 2025 to 2026 tax return, due by 31 January 2027. Customers should check and add it manually if it is not shown. Paper filers will need to add it on their tax return, due by 31 October 2026.

Explaining how the tax code change will work for basic rate taxpayers, HMRC said: “Your total income is £37,710. This is made up of £25,737 from a private pension and £11,973 from your State Pension. In December, you got a £200 Winter Fuel Payment. Your Personal Allowance is £12,570. We’ll reduce your tax free amount by:

• £11,973 (your State Pension)
• 1,000 (1,000 × 20% = the £200 Winter Fuel Payment you need to repay)

“This is your total deductions. £12,570 (Personal Allowance) – £12,973 (total deductions) = –£403 of tax free allowance. Your new tax code is K39. This means you’ll pay extra tax on £399 of income. You’ll pay around £17 more tax per month.”

The payment recovery only applies to pensioners who exceed the income threshold and didn’t opt out of getting the Winter Fuel Payment last year.

Pensioners have also been warned to be on high alert for scams.

Myrtle Lloyd, HMRC’s Chief Customer Officer, said: “Criminals are great pretenders and often use fake letters, emails, calls and texts to impersonate HMRC and trick people into giving them money.

“I’d encourage anyone who’s unsure to use our online tool at GOV.UK to check whether and how their payment will be recovered – there’s no need to call us.”

HMRC Confirms New £17 Charge for State Pensioners – Who Will Pay and How It Works

Some UK pensioners are facing an additional monthly tax deduction of around £17 under rules introduced for the recovery of Winter Fuel Payments. However, the change does not apply to every person receiving the State Pension. The deduction is linked to income and the receipt of a Winter Fuel Payment.

Under the rules confirmed by HM Revenue & Customs (HMRC), pensioners with total annual income above £35,000 who receive a Winter Fuel Payment can have the value of that payment recovered through the tax system. For a typical £200 payment, HMRC says this works out at approximately £17 a month during the 2026–27 tax year for people whose tax is collected through PAYE.

The distinction is important because headlines describing this as a new £17 “charge for state pensioners” could suggest that everyone receiving the State Pension will automatically lose £17 a month. That is not what the HMRC rules say.

Why is HMRC recovering the money?

The change concerns the Winter Fuel Payment, a government payment designed to help eligible older people with heating costs.

The eligibility rules were changed so that pensioners with total income of £35,000 or less can retain the payment, while those with income above £35,000 have the payment recovered. The threshold applies to an individual’s total income rather than simply looking at the State Pension alone.

This means that a pensioner receiving a relatively modest State Pension could still be affected if they also receive income from other sources, such as a private pension, employment, investments or other taxable income.

Conversely, receiving the State Pension does not automatically mean that someone will face the £17 deduction.

The policy was designed to target Winter Fuel support according to income without requiring the government to means-test the payment before it is issued. HMRC describes the £35,000 threshold as being above the income level of pensioners in poverty.

How the £17 figure is calculated

For the 2026–27 tax year, HMRC gives the example of a typical £200 Winter Fuel Payment.

Rather than asking an affected pensioner to repay £200 in one lump sum, HMRC can adjust their PAYE tax code. For a typical £200 payment, the resulting deduction is approximately £17 per month.

The figure therefore represents the recovery of the earlier Winter Fuel Payment spread through the tax system. It is not a separate £17 fee simply for receiving the State Pension.

For people whose circumstances are different, the actual amount deducted can vary.

The calculation can also be affected by the pensioner’s tax position, total income and the amount of Winter Fuel Payment involved.

The £35,000 threshold is crucial

The most important figure for pensioners is therefore not £17 but £35,000.

HMRC says that people whose total annual income is £35,000 or less can keep their Winter Fuel Payment. Those whose income exceeds £35,000 are subject to the recovery charge.

For example, a pensioner could receive the State Pension and a private pension. If their combined income remains below the threshold, the Winter Fuel Payment is not recovered under these rules.

If their total income rises above £35,000, however, the payment can be recovered.

This makes it particularly important for pensioners approaching the threshold to understand what HMRC counts as income and how changes in pension income could affect their tax position.

The deduction changes in 2027–28

There is another important detail that could make the headlines about the £17 figure confusing.

HMRC says that in the 2027–28 tax year, a typical £200 payment could result in deductions of approximately £33 per month for affected PAYE customers.

This temporary increase occurs because HMRC will be recovering payments relating to both the 2026 and 2027 winter payments during that tax year.

From 2028–29 onwards, HMRC says deductions will return to approximately £17 a month for a typical £200 payment, assuming the same circumstances.

Therefore, pensioners should not assume that the £33 figure represents a permanent new monthly tax.

It is connected to the transitional arrangements for recovering two winter payments during the same tax year.

What happens to people who use PAYE?

For pensioners who pay tax through PAYE and do not complete a Self Assessment tax return, HMRC can make the adjustment automatically.

The tax authority changes the person’s tax code so that additional tax is collected over time.

HMRC’s guidance states that people generally do not need to make a separate repayment themselves when the recovery is being handled through PAYE.

Pensioners should nevertheless check their tax-code notices carefully.

A change in tax code can affect the amount of tax-free income available and therefore the amount of tax deducted from other pension or employment income.

If someone believes that HMRC’s information about their income is incorrect, they should check their details through the official HMRC service rather than simply assuming that the deduction is correct.

What about people who complete Self Assessment?

Different arrangements apply to pensioners who already complete a Self Assessment tax return.

HMRC says the Winter Fuel Payment charge can be included in the relevant tax return. For online filers, the payment should appear as part of the information HMRC holds, although taxpayers are advised to check the figures.

For the 2025–26 tax year, the online Self Assessment deadline is 31 January 2027, while the paper return deadline is 31 October 2026.

This means pensioners who already submit tax returns should not automatically expect to see the £17 deduction through PAYE.

Their Winter Fuel Payment recovery can instead form part of their normal Self Assessment calculation.

Pensioners should check their total income

The change highlights why pensioners should look beyond the State Pension when considering their tax position.

A person might receive income from several different sources, including the State Pension, a workplace pension, a private pension, employment or investment income.

The combined figure is relevant when determining whether the £35,000 threshold is exceeded.

A pensioner who believes they are close to the threshold may therefore want to check their expected annual income rather than looking only at their State Pension statement.

HMRC provides an online calculator to help pensioners determine whether their income is above the threshold and understand how recovery may work.

The rule does not mean every pensioner loses £17

This is perhaps the most important point behind the headline.

The £17 figure should not be interpreted as a universal reduction in the State Pension.

A pensioner below the £35,000 income threshold can retain the Winter Fuel Payment under the rules. A pensioner above the threshold who receives the payment can have its value recovered.

The amount is also not necessarily £17 for everyone.

The official HMRC example is based on a typical £200 Winter Fuel Payment and a PAYE taxpayer. Different payment amounts and tax circumstances can produce different results.

Pensioners should also watch for scams

HMRC has warned pensioners to be careful about criminals using the Winter Fuel Payment changes to impersonate the tax authority.

The tax authority has advised that people should not provide bank details or make repayments simply because they receive an unexpected text, email or phone call claiming to be from HMRC.

Instead, pensioners should use official GOV.UK services to check their circumstances and any tax-code changes.

This is particularly important because changes involving pensions and tax can create an opportunity for fraudsters to exploit confusion.

What pensioners should do now

The first step is to establish whether total annual income is above or below £35,000.

Those below the threshold generally do not need to worry about the £17 recovery described in the headlines.

Those above the threshold should check their HMRC tax-code information and understand how the Winter Fuel Payment is being recovered.

People completing Self Assessment should check that the payment is correctly reflected in their tax return.

Most importantly, pensioners should not assume that every reference to a “£17 charge” means their State Pension itself has been cut.

The actual policy is more specific: HMRC is recovering the value of Winter Fuel Payments from pensioners whose total income exceeds £35,000. For a typical £200 payment, that recovery is approximately £17 per month in the 2026–27 tax year when collected through PAYE.

For many older households, the distinction between a reduction in State Pension and recovery of a separate winter payment will be financially significant. Understanding the £35,000 threshold, checking tax codes and using official HMRC information can help pensioners establish exactly how the rules apply to their own circumstances.