Rachel Reeves Confirms State Pensioners Over £35k Income to Lose £33 Monthly
The Government has officially announced new regulations that will impact certain state pensioners, confirming that individuals with incomes over £35,000 will face a deduction of £33 per month from their payments. This change is part of a broader shake-up in how support payments are issued to pensioners across the country.
New Rules for Winter Fuel Payments
It relates specifically to new rules surrounding Winter Fuel Payments and how money is being clawed back from those who do not qualify for the support. From next year, pensioners whose total income exceeds £35,000 will have £33 deducted from their payments each month. This year, they will lose £17 per month as the transition begins.
HMRC is taking back the Winter Fuel Payment money, which essentially was not theirs to begin with, as the fuel allowance was previously handed to all retirees before Christmas. However, the support is no longer universal for all pensioners; those with incomes over £35,000 are now deemed ineligible.
Implementation and Collection Methods
Taking back the money in monthly instalments by the tax authority is seen as the easiest way of separating those who are and are not eligible. The Government explained: "If your total income is over £35,000, you’ll need to pay back the payment." HMRC will automatically collect the payment through tax codes unless individuals already file self-assessment tax returns.
This means that tax codes will be changed for the 2026 to 2027 tax year. For a typical payment of £200, approximately £17 per month will be deducted. In the 2027 to 2028 tax year, the deduction will increase to approximately £33 per month for a typical payment of £200, as payments from both 2026 and 2027 are collected. It will then return to approximately £17 per month for the 2028 to 2029 tax year.
Impact on State Pension Payments
Overall, state pension payments are set to increase by either £575 or £440 a year from April, depending on how old people are. This adjustment comes amidst the new clawback measures, which aim to ensure that only eligible pensioners receive the Winter Fuel Payment support.
For those who file self-assessment tax returns online each year, HMRC will automatically include the payment on the 2025 to 2026 tax return as part of their income, streamlining the process for affected individuals.
