HMRC to accept monthly payments from pensioners via tax code change (Image: Getty)
State pensioners with incomes over £35,000 face an additional tax charge of around £17 each month from HM Revenue and Customs (HMRC).
The additional monthly payments are intended to cover winter fuel charges issued in winter 2025-26 to pensioner households with an individual annual income of more than £35,000. HMRC are currently in the process of clawing back these payments, with the process starting at the start of the new tax year in April, meaning pensioners above the £35,000 income threshold now face additional tax charges each month as the money is clawed back. Winter fuel payments range from £100 to £300 and the amount you receive depends on your age and individual circumstances, so your monthly tax bill will vary depending on the size of your winter fuel payment.
HMRC will automatically refund winter fuel payments for high-income pensioners. This is typically done by changing the tax code for the 2026-2027 tax year.
For self-assessment retirees who apply online, the payment must instead be pre-claimed on their 2025-26 tax return due by 31 January 2027. Pensioners should check the availability of the payment, and in cases where it is not displayed, it should be added manually. Those filing paper returns must add it to their tax return by October 31, 2026.
According to HMRC, pensioners with income above the £35,000 threshold who received a winter fuel payment of £200 last winter, will pay around £17 extra per month. tax in the current tax year until the amount is paid in full.
HMRC said: “For a typical winter fuel payment of £200, PAYE customers with incomes over £35,000 will pay an additional £17 per month over the 2026-27 tax year to get their payment back.”
The tax surcharge began in April 2026 and households were required to receive a letter or email from HMRC confirming their tax code had changed in order to get their winter fuel payment back.
This means pensioners will pay more tax each month until the full winter fuel payment they received in the 2025/26 tax year is paid. Pensioners have to wait for HMRC to collect the payment and are unable to pay it in a lump sum sooner.
Explaining how the tax code change will affect basic rate taxpayers, HMRC added: “Your total income is £37,710. This consists of £25,737 from your private pension and £11,973 from your state pension. In December you received a winter fuel payment of £200. Your personal allowance is £12,570. We will reduce your tax-free amount to:
- £11,973 (your state pension)
- 1000 (1000 x 20% = £200 winter fuel payment you need to pay)
“These are your total deductions. £12,570 (personal allowance) – £12,973 (total deductions) = -£403 tax-free benefits. Your new tax code is K39. This means you’ll pay extra tax on £399 of income. You’ll pay around £17 more in tax per month.”
The automatic refund of winter fuel charges for those with an annual income exceeding £35,000 applies throughout the UK, including in Scotland, where the payment is known as the Superannuation Winter Heating Charge, and in Northern Ireland, where payments were made by the Department for Work and Pensions (DWP) on behalf of the Northern Ireland Executive. In all cases, recovery is handled by HMRC.
The restoration of payments applies only to pensioners who exceeded the income threshold and did not refuse to receive winter fuel payments last year.
As payments are now being restored, HMRC has warned pensioners to be “on alert” for scams and said it will never contact people by text message or email to ask them to clear winter fuel payments or ask for bank details.
Myrtle Lloyd, HMRC’s director of customer services, said: “Criminals are great pretenders and often use fake letters, emails, calls and text messages to impersonate HMRC and trick people into giving them money.
“I would encourage anyone who is unsure to use our online tool on GOV.UK to check if and how their payment will be refunded – there is no need to call us.”