Thousands of UK pensioners face having £300 deducted from their bank accounts by HM Revenue & Customs (HMRC) under new rules for Winter Fuel Payments.
Who is affected by the new payment rules?
The system, which is new for 2025, initially pays the Winter Fuel allowance to all eligible pensioners. However, only those with annual incomes under £35,000 will ultimately get to keep the money. Approximately four million pensioners with higher incomes are not eligible and will have the payment reclaimed.
This marks a significant scaling back of the previously universal benefit for all over-65s, which was first reduced in 2024 by the Labour Government.
How will the deductions work?
In most cases, the process should happen automatically. HMRC will reclaim the payment through the PAYE (Pay As You Earn) system, meaning most households will not need to take any action.
The department has advised recipients to be cautious, noting that the money appearing in their accounts is not technically theirs to spend if they fall into the higher-income bracket. Payments began being issued at the start of November and will continue throughout November and December.
Why has the system changed?
The reform comes after a previous backlash against cuts forced ministers to devise a new plan. The current system aims to ensure lower-income retirees continue to receive support while preventing what the government sees as wasted expenditure on wealthier pensioners.
While potentially confusing for some, this method was deemed the most straightforward way to distinguish between those who do and do not qualify for the payment this winter.
