Winter Fuel Payments to be reinstated for millions – Martin Lewis explains how it'll work, what it means and if it's an improvement

Watch Martin's instant analysis recorded just after changes to Winter Fuel Payment (WFP) were announced.

How the Winter Fuel Payment will work for 2025/26

Here's what we know so far about the process in England and Wales – see Northern Ireland and Scotland info below.

• All households with a State Pensioner born on or before 21 September 1959 will get a payment of either £200 or £300 automatically. The higher payment is given when there is someone in the house born on or before 21 September 1945 (in other words, aged 80 or over). It's normally paid in November or December, though the Government hasn't yet confirmed the exact dates for the coming winter.

• If an individual State Pensioner earns over £35,000 this tax year (2025/26), their portion of the payment will be clawed back through the tax system. For most, this will happen automatically through pay-as-you-earn (PAYE), via a change in your tax code next tax year (2026/27).
  
  Though if you already file a self-assessment tax return (for example, because you're self-employed or have a high income), then it will be clawed back through that. Self-assessment is done after the end of the tax year, so this will be done after April 2026.
  
  Crucially, the Government says that "no one will need to register with HMRC for this or take any further action".

• For pensioner couples, the payment will usually be split between you. A simple example helps to illustrate this. Where a £200 payment is due for a two-pensioner household, each will be paid their share of £100 directly.
  
  If one individual earns £40,000 then – as it's above the clawback threshold – their £100 will be reclaimed through the tax system. If the other pensioner earns £30,000, as it's below the threshold, they keep their £100. It works similarly for households where one is over 80 or where there are more than two pensioners.
  
  There is one exception – if you're a couple claiming Pension Credit, there's no split. You'll get £200 or £300 (if one of you is 80+) in one lump sum. And the clawback will not affect you, as if you earned enough for the clawback to apply, you wouldn't be eligible for Pension Credit in the first place.

• It’s important to stress you do not need to do anything right now to get the Winter Fuel Payment – beware of scams. One of the benefits of the new system is that everyone who is getting the State Pension will be paid it automatically – so there is no need to apply to claim it.
  
  Yet sadly scam texts and on social media, and likely email too, have already started to spring up with links or phone numbers trying to get people to claim. If you see one of these it is a scam. Do not reply.

• You will be able to opt out of the payment. Some pensioners during the political debate have said they don’t need the money, so an opt out is to be introduced. This may be useful if you know your income will be above the £35,000 a year threshold, so you simply don't get the payment rather than have it clawed back.
  
  There is only scant info from the Government on how the opt out will work at the moment (for example, is it an individual or a household opt-out?), but it says it will publish more information about how to do this "in due course". What we have got confirmed though, is if you opt out and then your circumstances change, you'll be able to opt back in before the end of the tax year.
  
  And as Martin suggests, if you earn under £35,000 but don't feel you want the money, "another option rather than opting out is to donate it to charity so it can claim the Gift Aid on top."

• While the Winter Fuel Payment is no longer linked to it, it's still worth checking if you qualify for Pension Credit. Pension Credit is a top-up for State Pensioners on low incomes. It's worth on average around £4,000 a year and unlocks access to a range of other benefits – yet some 700,000 eligible pensioners are missing out. It takes minutes to check if you qualify, and it's well worth doing.

Your Winter Fuel Payment questions answered

While the new Winter Fuel Payment is simple for most, as always there are edge cases which are complex. So we've compiled your key questions below and hope this answers them, please suggest any missed questions you feel we haven't covered. We will continue to update this story as we learn more.

Scroll to read or click the links to go directly to the relevant answer...

- What counts as 'income' for the £35,000 a year threshold?
- What about savings interest within the personal savings allowance?
- Can I pay more into my private pension to reduce my taxable income so I qualify for the payment?
- What if I've deferred taking my State Pension?
- Is the Winter Fuel Payment taxed?
- How will it work for single pensioners (or those living with under-66s)?
- How will it work for couples?
- How will it work for three or more pensioners in a household?
- Will care home residents get a Winter Fuel Payment?
- How will the Winter Fuel Payment work in future years?
- What about Northern Ireland and Scotland?

💬 What counts as 'income' for the £35,000 a year threshold?

The Government says the means test will be based on your 'taxable income' for the current 2025/26 tax year (6 April 2025 to 5 April 2026) – in other words, all of your earnings that are subject to income tax.

This isn't straightforward to define exactly, but it DOES include earnings from:

- Private pensions;
- The State Pension (which has always been a taxable payment);
- Employment or self-employment;
- Non-ISA savings interest;
- Non-ISA investment dividends;
- Carer's Allowance, Incapacity Benefit and any other taxable state benefits (see the full list on Gov.uk);
- Any other sources subject to income tax.

It DOESN'T include:

- The Winter Fuel Payment itself;
- Savings or investment income within ISAs;
- Premium Bonds prizes;
- Friendly society tax-free savings plans;
- Tax-free pension lump sums within the 25% allowance;
- Capital Gains;
- Attendance Allowance, Disability Living Allowance, Pension Credit, Personal Independence Payment or any other tax-free state benefits (see the full list on Gov.uk).

💬 I'm earning interest on savings outside an ISA. The interest is within my personal savings allowance (PSA) – will this count as income?

Even though you pay zero tax on interest within your PSA, it's still technically considered taxable income – so it would count for determining whether your overall income is under the £35,000 threshold.

For example, say you are a basic-rate taxpayer who earns £800 savings interest outside of an ISA. As this is under the £1,000 a year PSA for basic-rate taxpayers, you don't pay tax on the interest – yet the £800 interest does count towards the £35,000 figure for the Winter Fuel Payment.

💬 Would it be worth paying more into my private pension to reduce my taxable income below £35,000 so I qualify for the Winter Fuel Payment?

No, this usually won't work. Increasing workplace or private pension contributions doesn't reduce your taxable income (while you pay from pre-tax income, the income still counts as taxable for Winter Fuel purposes)

There is one exception to this if you're employed and your workplace offers a pension 'salary sacrifice' scheme (some do; many don't). This is where you choose to receive a lower salary so your employer can pay that amount into your pension (giving an extra National Insurance gain). Increasing your salary sacrifice pension payment does reduce your taxable income, so it could help you to qualify if it brings you below the £35,000 threshold.

💬 What if I've deferred taking my State Pension?

You can still qualify, as eligibility for Winter Fuel Payments is based on age. The Government says: "The Winter Fuel Payment for 2025 to 2026 will be made to everyone in England and Wales born before 22 September 1959, unless you choose not to get it." (Though, of course, if you earn over £35,000 a year, it'll be clawed back.)

As in previous years, if you've deferred your State Pension and don't get any benefits, you'll need to apply for the Winter Fuel Payment (as the Department for Work and Pensions won't have your bank details). More details on how to do this will be published on Gov.uk later this year – you'll have until 31 March 2026 to apply.

💬 Is the Winter Fuel Payment taxed?

No. It is tax-free and does not count towards your taxable income.

💬 How will the payment be clawed back for single pensioners (or those living with people under 66)?

You'll be paid the full amount of £200 if you're 66 to 79 or £300 if you're 80+. If your taxable income is £35,000 or less, you'll get to keep it. If it's over £35,000, the full amount will be clawed back through the tax system.

💬 How will the payment be clawed back for state pensioner couples?

The Winter Fuel Payment is usually £200, with an extra £100 for households where there is someone aged 80 or over (up to £300 in total). In a state pensioner couple:

1. If both people are 80+, the total will be split evenly, with each person being paid £150 (£300 total).

2. If one is 80+ and the other under 80, the older person will be paid £200 and the under-80 will be paid £100 (£300 total).

3. If both people are under 80, each will be paid £100 (£200 total).

The payments will then be means-tested based on each person's individual income – if it's over £35,000, the amount they get will be clawed back. So, for example, in a scenario where there's an over 80 living with an under 80, if the older person earns over £35,000, they will have their £200 clawed back. If the younger person earns under £35,000, they will keep their £100. So the net benefit to the household would be £100.

💬 What if there are three or more pensioners in the household?

The amount you'll get depends firstly on your age and secondly on your income. This looks complicated on the surface, but you don't need to worry about it too much – it actually means a household could end up getting more than £300 in total depending on the specific circumstances.

• First, here's the amount you'll be paid...
  
  If NOT claiming Pension Credit:
  - Each individual is paid at least £100 – this increases to £150 or £200 based on the ages of other people in the household (regardless of whether those other people claim Pension Credit or not).
  - If all are aged 66 to 79, each person is paid the £100 starting amount.
  - If ONE person is aged 80+ and the rest are 66 to 79, the person aged 80+ is paid £200 and the rest are paid £100 each.
  - If more than one person is aged 80+, each of them is paid £150 (and anyone aged 66 to 79 is paid £100 each).
  
  If claiming Pension Credit:
  - Each couple is paid a total of £200, or £300 if at least one of them is aged 80+.
  - Each individual is paid £200 or £300 if aged 80+.
  
  For example:
  - A couple on Pension Credit, both aged 66 to 79, is paid £200. They live with a parent aged 80+, also on Pension Credit, who is paid £300. The household is paid £500 in total.
  - Three sisters, all on Pension Credit, all aged 66 to 79. Each is paid £200. The household is paid £600 in total.
  
  If there is a mixture of Pension Credit claimants and non-claimants:
  - Those claiming Pension Credit are paid in line with the entitlements above.
  - Those not claiming Pension Credit are paid at least £100 each (£150 if they're 80+ and there are other 80+ people in the household, £200 if they're the only person 80+ in the household).
  
  For example:
  - A couple aged 66 to 79 on Pension Credit is paid £200. They live with a parent aged 80+ not on Pension Credit, who is also paid £200. The household is paid £400 in total.
  - Three sisters, all aged 66 to 79. One is on Pension Credit, so is paid £200. The others are not, so they're paid £100 each. The household is paid £400 in total.
  - Three sisters. One is aged 80+ and on Pension Credit, so is paid £300. Another is 80+ but not on Pension Credit, so is paid £150 (because she's not the only 80+ person in the house). One is 66 to 79 and also not on Pension Credit, so is paid £100. The household is paid £550 in total.
  - Three sisters, all aged 80+. One is on Pension credit, so is paid £300. The other two aren't on Pension Credit, so they're paid £150 each. The household is paid £600 in total.
  

• Next, the payments are means-tested based on each person's individual income. If it's over £35,000, the amount they were paid will be clawed back. But anyone whose income is under the threshold gets to keep their share.

💬 Will care home residents get the Winter Fuel Payment?

Yes, unless they're on Pension Credit or another means-tested benefit. The Government says many people receiving these benefits already get care and accommodation costs met by their local authority, so won't qualify for the Winter Fuel Payment.

If you DON'T get Pension Credit or another means-tested benefit, you'll be paid a Winter Fuel Payment of £100 per person if aged 66 to 79, or £150 per person if aged 80 or over. This will then be clawed back if your taxable income is above £35,000 a year.

💬 How will the Winter Fuel Payment work in future years?

We don't know, as the Government has only set out the policy for winter 2025/26.

💬 What about Northern Ireland and Scotland?

The detailed info above covers England and Wales. The rules are likely to be the same or similar in Northern Ireland and Scotland, though we don't yet know for sure.

The Northern Ireland Executive and the Scottish Government are responsible for the Winter Fuel Payment (or its equivalents) in their respective countries.

• Northern Ireland's communities minister Gordon Lyons has confirmed that the Executive will look to expand the payments in line with the new criteria in England and Wales. He said: "My officials are engaging with colleagues in the Department for Work and Pensions to understand how the changes to the Winter Fuel payment announced today will be implemented, to ensure Northern Ireland is ready to follow suit."

• Scotland's First Minister John Swinney confirmed on Monday 16 June that "no pensioner in Scotland will receive less than they would under the new UK scheme". He added that more details would be set out "in due course".
  
  The Scottish Government had previously announced that a new, equivalent 'Pension Age Winter Heating Payment' would be paid by Social Security Scotland from 2025/26 – and had said the eligibility and payment amounts would be the same as those in England and Wales.