How are Winter Fuel Payments changing in 2025, and what does it mean for pensioners across the UK? The Minister for Pensions has issued a detailed reply to the Social Security Advisory Committee (SSAC) following its recommendations on the Social Fund Winter Fuel Payments Regulations 2025.
The exchange sheds light on the new income-based system, the role of HMRC in recovering payments from higher-income pensioners, and the balance the Government seeks to strike between fairness, simplicity, and fiscal responsibility.
Recommendation 1: Should Eligibility Be Linked to Other Benefits?
The SSAC proposed that Attendance Allowance, Housing Benefit, and similar pension-age benefits should be included as qualifying criteria. The Minister responded by confirming that all pensioners will continue to receive a Winter Fuel Payment. However, from 2025–26, payments will be recovered via the tax system for those with annual incomes above £35,000.
The Government stressed that no pensioners who received a Winter Fuel Payment in 2024–25 will lose out in 2025–26, even if their household income exceeds the new threshold.
Recommendation 2: Why Use Taxable Income as the Means Test?
The Committee questioned whether taxable income is the right measure, arguing it does not reflect the unique financial pressures on pensioners. The Minister defended the decision, pointing out that the £35,000 threshold aligned with average UK earnings strikes a balance between fairness and efficiency.
The Government emphasised that Winter Fuel Payments remain a simple, automatic lump sum of between £100 and £300, avoiding complex application processes and ensuring timely support.
Recommendation 3: Is Recovery Through HMRC Cost-Effective?
The SSAC expressed concern that recovering payments through HMRC could consume more resources than the money reclaimed. The Minister argued that recovery is proportionate, transparent, and necessary to maintain fairness.
A Tax Information and Impact Note will be published at Budget, setting out the costs and impacts of HMRC’s recovery process. Pensioners will also retain the option to opt out of receiving the payment altogether, though this remains voluntary.
Recommendation 4: How Will Pensioners Be Supported With Paper Tax Returns?
The Committee highlighted the risk that vulnerable pensioners could make mistakes on paper tax forms, unintentionally breaking rules. The Government confirmed that no pensioner will be required to register for Self-Assessment solely due to Winter Fuel Payments.
HMRC will provide clear and accessible guidance for both online and paper forms, ensuring that pensioners know exactly how to declare Winter Fuel Payments where needed.
Recommendation 5: Will Overpayments Be Recovered Consistently?
The SSAC pointed out inconsistencies in recovery processes depending on whether DWP or HMRC is responsible. The Minister clarified the approach:
- Incorrect payments will be recovered by DWP, except when caused by official error.
- Correct payments made to higher-income pensioners will be treated as taxable income and collected by HMRC in line with the HMRC Charter.
This distinction, the Government argues, provides fairness while maintaining clarity.
Recommendation 6: Will the Equality Impact Assessment Be Updated?
Concerns were raised about errors and weaknesses in the Equality Impact Assessment (EIA). The Minister confirmed that the Department will revise the EIA, correcting inaccuracies and addressing gaps in data.
Recommendation 7: How Will Care Home Residents Be Treated?
The SSAC asked the Government to review the position of pensioners in residential care, particularly those on Pension Credit. The Minister noted that these issues mainly relate to long-standing WFP rules and will be considered for future years rather than immediately.
Recommendation 8: Should the Policy Be Reviewed Again Before Next Winter?
The Committee suggested that the policy should be reconsidered and clarified before the qualifying week for the next winter’s payment. The Minister disagreed, stressing the importance of giving pensioners certainty.
The policy remains clear: pensioners with annual incomes of £35,000 or less will receive between £100 and £300 each winter. While the Government does not intend to revisit the rules immediately, it has offered to engage with the Committee further to discuss how WFP and related benefits support efforts to tackle pensioner poverty and fuel insecurity.
What Do These Changes Mean for Pensioners?
The move to a £35,000 income threshold represents a major shift from the previous near-universal system. The following table highlights the difference between the old and new arrangements:
| Winter Fuel Payment System | Who Qualifies | How Recovery Works | Payment Amount |
| 2024–25 (linked to Pension Credit) | Pensioners on Pension Credit and certain qualifying benefits | No recovery mechanism | £100–£300 |
| 2025–26 (income threshold) | All pensioners with income up to £35,000 | HMRC recovers from those above £35,000 | £100–£300 |
This approach ensures wider support than last year, while still targeting funds more effectively than under the old universal model. It marks an attempt to balance simplicity, fairness, and the responsible use of taxpayers’ money.
FAQs
What is the income threshold for Winter Fuel Payments in 2025–26?
Pensioners with annual incomes up to and including £35,000 will qualify for a Winter Fuel Payment.
How much will pensioners receive under the new rules?
Eligible pensioners will receive between £100 and £300 as a one-off payment each winter.
Will high-income pensioners still get a Winter Fuel Payment?
Yes, but if their income exceeds £35,000, HMRC will recover the payment through the tax system.
Do pensioners need to apply for a Winter Fuel Payment?
No, payments remain automatic. Pensioners do not need to make a claim.
