The Winter Fuel Payment was introduced in 1997 by Gordon Brown, who was chancellor at the time. When it was brought in, the annual tax-free lump sum payment was £20 per household for “all pensioners”, regardless of wealth status.
Over the years, the amount has increased in line with the cost of living. The House of Commons Library says that “in most years, it has been £200 for households where the oldest person is under 80, and £300 for households where someone is 80 or over”.
While the Winter Fuel Payment was not initially means-tested, the government has announced several changes to the regime since 2024, and you may be confused as to what you will receive.
Here is what you need to know.
In 2024, Rachel Reeves announced that the Winter Fuel Payment would be means-tested
In July 2024, chancellor Rachel Reeves announced that the Winter Fuel Payment would only be available to certain people from the 2024/25 winter onwards, whereas previously, it had applied to everyone once they reached State Pension Age.
Those eligible included people who claimed Pension Credit and a few other means-tested benefits. The government reports that this led to 9.3 million fewer people receiving the payment in the winter of 2024/25 compared to 2023/24.
In 2025, the government adjusted its new Winter Fuel Payment policy
After questions were raised about the chancellor’s 2024 Winter Fuel Payment change, the government announced new rules in 2025.
The rules are now as follows:
- The Winter Fuel Payment is still means-tested.
- To be eligible in 2026, you need to have been born before 28 June 1960.
- You must be living in England or Wales for the “qualifying week” – in 2026, this is 21 – 27 September. Those who have been receiving free, full-time hospital treatment during that week may not be eligible.
- If you have a taxable income of £35,000 a year or less, in line with the above rules, you can receive the payment.
- If you live in a care home, you may still be able to receive a Winter Fuel Payment, unless you were living in care full-time before 28 June 2026, or you receive certain benefits such as Pension Credit.
- If you or your partner are under 80, your Winter Fuel Payment could be up to £200, and if one or both of you are over 80, it may rise to a maximum of £300.
It remains a tax-free lump sum, so your payment won’t affect how much Income Tax you are liable for.
The Winter Fuel Payment charge and how to opt out
Rather than only paying the Winter Fuel Payment to eligible recipients, the government pays everybody of eligible age and recoups the money from non-eligible recipients through tax.
If you’re on PAYE, your tax code will be adjusted accordingly. If you are self-employed, you will need to include the Winter Fuel Payment in your tax return each year and repay what you have received.
Fortunately, if you know you will not be eligible for the Winter Fuel Payment, you can simply opt out.
Following the instructions on the government website, you can let HMRC know you want to opt out – this may save you administrative time if you are 100% sure you would otherwise need to repay your Winter Fuel Payment when it arrives.
Keeping emergency cash reserves may help you manage rising energy costs
With the energy price cap set to rise by 13% in July 2026, you may already be aware that the cost of heating your home will probably go up this winter.
If you are not yet of eligible age or have a taxable income of more than £35,000 a year, you are unlikely to benefit from the Winter Fuel Payment. So, it is worth checking your cash savings and ensuring you have enough to cover additional bills, should they arise.
Although winter seems a while away, adding to your emergency fund over the course of the summer could stand you in good stead to easily cover the higher cost of energy in future.
Get in touch
Managing your income and means-tested benefits in retirement requires forward planning – especially when the government’s rules change frequently. We are here to help you stay abreast of any changes and make the most of your earnings and means-tested benefits.
Please get in touch to find out how our team of VouchedFor Top Rated planners could help today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.