Winter Fuel Allowance payment changes could leave taxpayers facing double bill, warn Prime Accountants

Introduced in the 2025/26 tax year, Winter Fuel Allowance repayments are already undergoing a change that could see some taxpayers facing a double hit to their incomes, cautions leading West Midlands accounting firm, Prime Accountants.

While Winter Fuel Allowance was previously paid only to those in receipt of Pension Credit, expanded eligibility criteria now means that more people receive the benefit.

For winter 2026 to 2027, people born on or before 27 June 1960 could receive between £100 and £300, with most eligible people receiving the payment automatically.

However, those with an income over £35,000 are expected to pay back the benefit through an adjustment in their tax code and this is where complications can arise.

Director at Prime Accountants, Paislei Godley, has observed a lack of communication around the issue that could be leaving taxpayers at risk.

“To make things more straightforward in the long run, HMRC will now take repayments in the same year as the allowance was issued,” Paislei explained. “However, there is a chance that some taxpayers could be hit with a double payment, depending on when the tax code is changed.”

From April 2027, HMRC is making the change to Winter Fuel Allowance repayments, but the changed tax code could see both the 2026 to 2027 and 2025 to 2026 payments taken at the same time.

“Some people who have been paid Winter Fuel Allowance will have already been asked for repayment while others have yet to be informed. Likewise, it may be that some tax codes are adjusted before the next tax year starts and others might take effect afterwards – it can be quite confusing for those affected.”

The uncertainty around the repayment will affect those who handle their tax through PAYE, as Self Assessment taxpayers will already have been declaring the Winter Fuel Allowance as a source of income and handling repayments accordingly.

Paislei advised: “The main thing that taxpayers need to do is check their tax codes and make sure they understand how and when repayments might impact them.

“HMRC will want the repayment eventually, even if it has not yet updated your tax code, but they will not place you in financial hardship by taking what is owed.

 “Something else to be mindful of is that the restriction placed on your tax code may seem a lot bigger than you would expect. For HMRC to regain the £300 owed, they would put a £1500 restriction on you, as 20 per cent of this is the target figure.”

As with other forms of tax payment, the Winter Fuel Allowance repayment will be spread throughout the year and should equate to £25 a month for someone paying back the full £300.

If a taxpayer is hit by the double payment, this will see some months face a £50 charge instead.

“Taxpayers can opt out of receiving Winter Fuel Allowance and not have to worry about the repayments entirely,” Paislei said. “But some might find the top-up useful in the colder months, provided they can handle the repayment costs throughout the year.

“I would strongly advise people to come to us for support as we can help you to understand your tax code and ensure that it is accurate. You don’t want to be in a situation where you are under- or overpaying your tax bill.”