Two million pensioners could have to repay up to £300 to HMRC – will it be taken from bank accounts?

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Some two million pensioners may have to repay up to £300 in tax due to changes to the Winter Fuel Payment.

From November, the payment is expected to continue to automatically go out to those aged 66 and over in order to help with heating costs, but there will be a new income cap which sees those earning more than £35,000 a year unable to qualify.

The new eligibility rules for the winter fuel payment will see around 7.4 million pensioners remain eligible for the payment, after Labour rowed back on the decision to restrict the payment to all but the poorest pensioners.

A payment of £200 per household, or £300 per household where there is someone over the age of 80, will be made automatically this winter.

But instead of withholding the payment upfront, or claiming it back directly from pensioner bank accounts, the government is set to pay everyone the winter fuel payment and recover the money from those over the threshold through the tax system.

This means no pensioner will need to take any action in order to receive the payment.

Will the money be taken from bank accounts?

Dan Whitworth, financial journalist for BBC Radio 4 Money Box, said: “That money will not be taken from bank accounts. Instead, HMRC will reclaim it through tax.”

The method to reclaim the payment will be through Pay As You Earn (PAYE), where the amount is automatically deducted monthly from the customer’s salary or pension income through a change to their tax code. The payment will be paid back in monthly instalments through the 2026 and 2027 tax year, starting from April 2026.

For existing Self Assessment customers, the amount will be added to next year’s tax bill if they file tax returns. HMRC will automatically include the payment on their 2025 to 2026 tax return, due by 31 January 2027.

They should check their winter payment is in their online return and include it if not. Those who file a paper Self Assessment tax return will need to include the payment on their 2025 to 2026 tax return, due by 31 October 2026.

A spokesperson for HMRC said: “The vast majority of people who need to pay back a Winter Fuel Payment will do so automatically via their tax code. For those already registered for Self Assessment, it will be collected via their tax return.

“We’ve provided online guidance clearly explaining how recovery of payments works, and a calculator so people can see if they’ll need to pay back the payment.”

Mr Whitworth then said the process would change again from 2027, as HMRC plans to collect two payments in that year.

“One to recover overpaid support from 2026 and another in advance for the 2027 payment,” he explained on BBC Radio 4. “Meaning some people could see deductions of up to £600 across the year.

“The government says this approach helps avoid delays in recouping overpayments and ensures the system stays up to date.”

Those who believe they will breach the £35,000 income threshold can opt out of receiving the 2026 Winter Fuel Payment, with instructions available at gov.uk or mygov.scot from April 1st 2026. It’s possible to do this by phone or by post.