Winter Fuel Payment Eligibility: How to Claim Yours

The government has announced that nearly all but the wealthiest 2 million pensioners will benefit from the winter fuel payment, which can reach up to £300 later this year.

Pensioners earning less than £35,000 per year, including the state pension, will qualify for this tax-free payment designed to assist with energy costs after the government responded to advocacy from both campaigners and its own MPs to expand eligibility.

This change means the number of pensioners eligible for the payment will jump from approximately 1.5 million last winter to around 9 million. This represents about 65 percent of all pensioner households.

While specific details are still pending, the government indicated that winter fuel payments will be disbursed automatically, meaning no action is required from recipients. For those earning over £35,000, there is an option to opt out or allow HM Revenue & Customs to reclaim the amount through taxation.

Payment Distribution and Repayment Process

Starting this winter, all individuals who have reached the state pension age by September 21 will automatically receive the winter fuel payment, with a cap of one payment per household. The payment amount increases from £200 to £300 for those aged 80 and older. When pensioners reside together, the payments will be divided unless they receive an income-related benefit.

Individuals with incomes surpassing £35,000 will not qualify and must repay the amount. Refunds can be handled automatically through the Pay As You Earn (PAYE) system if currently employed or through a self-assessment tax return for others.

Pensioners wishing to evade the potential hassle of tax filings can opt out if they do not meet the eligibility criteria. Further information on the opt-out process will be available as winter approaches, according to the government.

The Department for Work and Pensions (DWP) noted that for couples living together where one partner earns more than £35,000 while the other does not, the couple will receive the full payment; however, half of the amount will later be collected from the higher earner by HMRC.

For couples where one partner is over 80, they will receive £200 while the other will receive £100. If both are over 80, the maximum payment remains at £300 but will be issued in a lump sum.

Reasons for the Changes in Eligibility

The winter fuel payment, a tax-free benefit intended to assist pensioners with energy bills, was initiated in 1997. Initially, it was available to all who reached state pension age. During the winter of 2023-24, prior to the election of the Labour government last July, approximately 11.6 million pensioners in 8.5 million households received it.

However, in what the government deemed a necessary measure to address public finance challenges, eligibility was limited last winter to only those receiving pension credit or other means-tested benefits such as universal credit. The DWP estimated that this change reduced the number of recipients to 1.5 million across 1.3 million households.

This adjustment faced significant backlash from advocacy groups and was criticized by some Labour MPs and councillors, with claims that it negatively impacted the party’s recent performance in local elections. In response, Prime Minister Keir Starmer announced three weeks ago that the system would be modified to enhance eligibility for more pensioners.

The Importance of Claiming Pension Credit

The DWP estimated that only about 65 percent of eligible individuals claimed pension credit during 2022-23, suggesting that many pensioners may still be bypassing this beneficial program.

Pension credit, which currently assists approximately 1.36 million households, is aimed at helping those over state pension age with low incomes by supplementing their state pension to £227.10 weekly for single beneficiaries.

Additionally, it can provide other winter-related benefits, such as the warm homes discount of £150 on electricity bills and the cold weather payment of £25 for periods of extremely low temperatures.

Pension credit can typically be claimed if a single person’s income is below £227.10 weekly, or a couple’s income is under £346.60, considering all sources including state and personal pensions. Generally, pension credit will help increase the total income to meet these thresholds. For every £500 in savings exceeding £10,000, £1 is deducted from pension credit entitlement.