Winter Fuel Payment income threshold confirmed in new update for pensioners

Chancellor Rachel Reeves says the allowance will still be means-tested to exclude the wealthiest older people

Chancellor Rachel Reeves has announced huge changes to the Winter Fuel Payment that will restore it to the vast majority of pensioners (Image: Getty Images )

A new income threshold for the Winter Fuel Payment has been confirmed in a major update announced by the Government.

Some nine million pensioners in England and Wales – or more than three-quarters of the total number – will receive the Winter Fuel Payment this winter under the changes, the Chancellor said today (Monday, June 9).

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It means the payment of up to £300 will be restored to the vast majority of pensioners who previously received it.

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Anyone with an income of under £35,000 a year will now automatically receive the allowance. Those with an income above this threshold will also get it, but the amount will then be reclaimed from them in tax.

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The Government says this threshold is “well above the income level of pensioners in poverty and is broadly in line with average earnings, balancing support for lower-income pensioners with fairness to the taxpayer.”

The changes will cost around £1.25 billion in England and Wales and see means-testing of the Winter Fuel Payment save around £450 million, subject to certification by the Office for Budget Responsibility (OBR) compared with the previous system of universal Winter Fuel Payments.

The Government says no pensioner will need to take any action as those with incomes above the threshold will see the allowance automatically recovered by HMRC via PAYE, or via their Self-Assessment return.

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No one will need to register with HMRC for this or take any further action. Pensioners who want to opt out and not receive the payment at all will be able to do so, with details to be confirmed.

Chancellor Rachel Reeves said: “Targeting Winter Fuel Payments was a tough decision, but the right decision because of the inheritance we had been left by the previous government. It is also right that we continue to means-test this payment so that it is targeted and fair, rather than restoring eligibility to everyone including the wealthiest.

“But we have now acted to expand the eligibility of the Winter Fuel Payment so no pensioner on a lower income will miss out. This will mean over three-quarters of pensioners receiving the payment in England and Wales later this winter.”

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Approximately two million individuals in England and Wales over State Pension age have taxable incomes above £35,000.

Eligibility is based on a person’s age and place of residence during the qualifying week (the third full week of September). For winter 2025/26, the qualifying week will be September 15 to 21, 2025. A person needs to have reached State Pension age by the end of the qualifying week to be eligible.

Devolved authorities in Scotland and Northern Ireland will each receive a funding uplift so they too can meet the new threshold.

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Sir Keir Starmer announced there would be a partial U-turn on the policy in May, after it was thought to have contributed to Labour’s drubbing in the local elections.

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Over three-quarters of pensioners will be eligible for winter fuel payments this year, as Rachel Reeves discloses key details of the Government’s policy reversal. Pensioners with an income of £35,000 or less in England and Wales will receive the benefit this winter, a significant increase from the current cut-off point of £11,500.

This means that nine million pensioners will now qualify for the winter support. Approximately two million pensioners with incomes exceeding £35,000 will have the payment automatically reclaimed or can choose not to receive it.

Has the Prime Minister has made the right decision to reinstate winter fuel payments to more pensioners? Have your say in our comments section.

Last month, Keir Starmer expressed his desire for more pensioners to be eligible for the assistance, which is worth up to £300. The Prime Minister faced severe criticism after introducing a means-tested system for the winter fuel allowance last year, which had previously been a universal benefit. Roughly 10 million pensioners lost the support last winter, reports the Mirror.

The changes announced today will cost around £1.25 billion. The Treasury stated that the new means-testing system is expected to save approximately £450 million, compared to the universal system. No pensioner will need to take any action as they will automatically receive the payment this winter.

Payments of £200 per household, or £300 per household where there is someone over 80, will be made.

Pensioners earning above the £35,000 threshold will see the full amount of their winter fuel payment reclaimed automatically through PAYE or their Self-Assessment tax return. Pensioners who prefer not to receive the payment can opt out, with the DWP working on a straightforward system for this purpose.

Chancellor Rachel Reeves said: “Targeting Winter Fuel Payments was a tough decision, but the right decision because of the inheritance we had been left by the previous government. It is also right that we continue to means-test this payment so that it is targeted and fair, rather than restoring eligibility to everyone including the wealthiest.

“But we have now acted to expand the eligibility of the Winter Fuel Payment so no pensioner on a lower income will miss out. This will mean over three quarters of pensioners receiving the payment in England and Wales later this winter.”

Last month at PMQs, the Prime Minister expressed his desire to expand eligibility for winter fuel payments amidst signs of economic recovery, stating he wants to ensure “more pensioners are eligible for winter fuel payments”.

This unexpected pledge came as the government faced increasing calls to reverse its decision to withdraw the payment from all but the poorest pensioners – those in receipt of Pension Credit.

Labour tensions have escalated following Reform UK’s significant victories in the English local elections this May and a narrow by-election win in the traditionally Labour-dominated area of Runcorn and Helsby by just six votes.

In response to the policy reversal, Dennis Reed, director of the pensioner advocacy group Silver Voices, hailed today’s declaration as “fantastic news for older people in the UK”.

He highlighted the significance of the U-turn, noting that the payment will now be automatically distributed to all pensioners without the necessity of a claim, ensuring that it reaches everyone who found last winter challenging.

Joanna Elson CBE, Chief Executive of Independent Age, expressed her satisfaction with the news. However, she added: “While the changes to the Winter Fuel Payment are positive, they are not a silver bullet that will end pensioner poverty.

“Around 2 million older people still live in poverty, and measures must be taken to ensure the long-term financial security of all people in later life. There needs to be a cross-party consensus on the adequate income needed in later life to avoid financial hardship.”

Has the Prime Minister has made the right decision to reinstate winter fuel payments to more pensioners? Have your say in our comments section.

Pensioners with an income of more than £35,000 will be forced to hand back winter fuel payments under plans announced by Rachel Reeves.

The Chancellor had previously removed the payments from all but the poorest pensioners – those with incomes of less than £11,500 – but confirmed a U-turn on the policy on Monday.

Around three-quarters of pensioners in England and Wales, approximately nine million people whose annual income is below £35,000, will be entitled to a payment of up to £300 this winter.

But around a quarter will still not be entitled to it. Those earning over £35,000 will receive the money, but it will be effectively clawed back via HMRC based on an individual’s taxable income.

A Treasury spokesman said that for the “vast majority” this will be done via the PAYE system, and for a “minority” via a self-assessment tax return.

If both occupants of a household have an income over £35,000, the household will be required to return its full winter fuel payment. If one occupant has an income over £35,000 and the other less, half the money must be returned.

A total of 9 million pensioners in England and Wales with an annual income £35,000 or below will now be eligible for the payment of £200 per household with a pensioner under 80, or £300 with pensioner over 80.

READ MORE:

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The allowance was taken away from more than 10 million pensioners last year when the UK Government limited the payment to those receiving pension credit or another means-tested benefit.

Although the policy does not apply in Scotland, The Treasury has confirmed it will result in more funding for the Scottish Government.

It is understood that the Scotland could receive extra funding of over £100 million due to the recent decision taken by the chancellor.

The UK Government’s previous decision to limit it to only those on pension credit resulted in a £140m cut in Scotland and, last winter, 900,000 Scots pensioners missed out.

The Scottish government has already announced plans for a new winter heating payment for every single Scottish pensioner to be introduced ahead of winter 2025.

Pensioners in Scotland in receipt of qualifying benefits, such as Pension Credit, will receive payments of £200 or £300 depending on their age, while other households will receive £100.

Responding to the chancellor’s announcement, Scotland’s social justice secretary said it “still sounds” as if many pensioners will miss out.

Shirley-Anne Somerville also said the Scottish Government had not been consulted on the new policy.

The social justice secretary said: “The UK Government’s decision to cut the winter fuel payment was a betrayal of millions of pensioners and that is why the Scottish Government took action to introduce a winter heating payment for all pensioners in Scotland.

“I welcome any extension of eligibility by the UK Government, but this is a U-turn the Chancellor should have made a long time ago. But there is still no detail about how the Chancellor intends to go about that. Unfortunately, it still sounds as if many pensioners will miss out.

“We have once again not been consulted on the policy and its implications in Scotland and will scrutinise the proposals carefully when then are announced. I would therefore urge the UK Government to ensure the Scottish Government is fully appraised of the proposed changes as soon as possible.

“The Cabinet Secretary for Finance and Local Government wrote to the Chief Secretary to the Treasury last week to urge the UK Government to share its plans with us as quickly as possible, so that we can understand any implications for our own programmes and, crucially, our budget.”

The SNP has also said the Chancellor must now abandon “her devastating austerity cuts to disabled people” and scrap the two child benefit cap.

Charities such as Age UK, however, have welcomed the decision despite wishing it was made sooner.

Caroline Abrahams, Charity Director at Age UK said: “The Government’s Winter Fuel Payment announcement makes this a good day for older people.

“The decision to restore the Winter Fuel Payment to 9 million pensioners – all but those on the highest incomes who should be able to pay their heating bills without it – is the right thing to do and something that will bring some much-needed reassurance for older people and their families.

“At Age UK we heard from many through the winter who were so frightened about their bills that they didn’t even try to keep their homes adequately warm.

“This new policy will help all these people by restoring their Winter Fuel Payment and we welcome it as a result.

“Of course, we would much have preferred it had the Government taken this approach last summer but we are pleased it means that older people can look ahead to the coming winter with more confidence. This will be a huge relief to many of them and to us at Age UK too.

“There’s certainly a lot more for us to do as a country to tackle the scourge of fuel poverty, something that impacts people of all ages, including too many families with children and disabled people of working age, among others, but today rights a wrong and marks a start. We hope the Government will build on it.”

Nine million pensioners to receive winter fuel payment this year

The Chancellor has made the announcement

Rachel Reeves Author: By David Lynch

Some nine million pensioners in England and Wales will receive the winter fuel payment this winter, the Chancellor has announced.

The payment, worth up to £300, will be restored to the vast majority of pensioners who previously received it because anyone with an income of under £35,000 a year will now get the payment automatically.

Those with an income above this threshold will also receive the payment, but it will then be reclaimed from them in tax.

The decision to limit the winter fuel payment to only those who claimed pension credit was one of Labour’s first acts in Government, aimed at balancing what was described as a £22 billion “black hole” in the public finances.

This meant the number of pensioners receiving the payment was reduced by around 10 million, from 11.4 million to 1.5 million.

The Treasury claims the new arrangement will cost £1.25 billion in England and Wales, while means-testing winter fuel will save the taxpayer £450 million.

Chancellor Rachel Reeves said: “Targeting winter fuel payments was a tough decision but the right decision because of the inheritance we had been left by the previous government.

“It is also right that we continue to means test this payment so that it is targeted and fair, rather than restoring eligibility to everyone including the wealthiest.

“But we have now acted to expand the eligibility of the winter fuel payment so no pensioner on a lower income will miss out.

“This will mean over three-quarters of pensioners receiving the payment in England and Wales later this winter.”