On 29 July 2024, Chancellor of the Exchequer Rachel Reeves announced from winter 2024/25, households in England and Wales would no longer receive the universal Winter Fuel Payment. Instead, this was restricted to pensioner households receiving Pension Credit or certain other income-related benefits.
Essentially, the Social Fund Winter Fuel Payment Regulations 2024 legislated that the Payment moved from being one universally paid to all pensioners to one means-tested by reference to qualifying benefits and credits.
Universal payments were also removed in Northern Ireland courtesy of the Social Fund Winter Fuel Payment Regulations (Northern Ireland) 2024. This was legislation passed by the Department of Communities to maintain parity with the rest of the UK.
On 09 June 2025, a Press Release signalled the return of the Payment in England and Wales from winter 2025, explained as an increase to the means-test threshold in the 11 June 2025 Spending Review. Note that:
- The Winter Fuel Payment 2025 will not apply in Scotland as it is devolved and Social Security Scotland make a ‘Pension Age Winter Heating Payment’. The Scottish Government have pledged that this will remain a universal payment (to all);
- For the payment to return in 2025 in Northern Ireland on a means-tested basis in parity with England and Wales, legislation will have to be passed in the Northern Ireland Assembly
The Press Release advises that both Scotland and Northern Ireland will receive monies via the Barnet Formula Black Grant so they have the funds to follow the changes in England and Wales.
The important point to make is that the Winter Fuel Payment will continue to be mean-tested, however, the threshold moves from receipt of Pensions Credit and other income-related benefits to a flat £35,000 per annum. All people born before 22 September 1959 will receive the payment; however, the means-testing will kick in when HMRC recognise earnings are above the threshold of £35,000. Where income exceeds the threshold, the full payment will be recovered by HMRC in one of two ways:
1. If the individual is within PAYE, HMRC will adjust the tax code; or
2. If the individual is within Self-Assessment, HMRC will increase the Income Tax liability
It is also worthwhile mentioning that pensioners can opt-out of receiving the payment altogether. The UK Government will create a simple system for pensioners to opt out of Winter Fuel Payments.
For Bookkeepers
The Press Release makes two important points:
- The Payment will be recovered ‘automatically’ (via PAYE or Self-Assessment); but
- ‘No one will need to register with HMRC’ or ‘take any further action’
