The government has extended the winter fuel payment to three-quarters of pensioners. Those in England and Wales with taxable income of £35,000 or less will now receive their annual payment of £200. Making some small changes may mean you become eligible.

The winter fuel payment will be paid to all pensioners this November or December, but the two million pensioners with income of over £35,000 will have the payment automatically recovered via PAYE or self-assessment.

Planning

The relevant income is for the current 2025/26 tax year, so anyone planning to keep income within the £35,000 threshold needs to start straight away. Many pensioners will, of course, have a relatively fixed amount of income so planning is not an option. Also, any planning should take into account that only a £200 payment is at stake; so, no major changes are warranted.

• Those taking pension drawdown are probably in the best position to manage income. Even if income is well over the £35,000 threshold, planning might be possible.

A single pensioner taking drawdown income and with annual income of £40,000, could adjust their drawdown so that annual income is £35,000 (current year), then £45,000 and £35,000. Two out of the next three years will then qualify (assuming the rules are unchanged) without a reduction in overall income or any extra tax cost.

• More pensioners are generating self-employment income beyond retirement age; there may also be scope here for planning.

A single pensioner with pension income of £30,000 and self-employed income of £5,250, could buy a new phone, tablet or printer costing £250 – effectively for free. The tax saving will be £50 (£250 at 20%), plus the £200 payment will be retained.

If savings income will take a pensioner just over the threshold, maybe savings could be transferred to a partner or invested in an ISA instead.

There is an opt-out for those who do not wish to receive the winter fuel payment; either because the payment is not needed or where income exceeds the threshold. Contact the Winter Fuel Payment Centre before 15 September 2025.

Couples and older pensioners

Each partner in a pensioner couple usually shares the payment, both receiving £100. The £35,000 threshold is applied individually, so a couple with income of £70,000 and £30,000 respectively will still receive one £100 payment.

A higher winter fuel payment of £300 is paid if a household includes a pensioner aged 80 or over.