Winter fuel payment shock: are you among the 5 groups losing £200–£300 as HMRC claws cash back?

As temperatures drop, households weigh up heating costs, tax rules and eligibility letters that could shape a tight winter budget.

The Department for Work and Pensions has confirmed changes that matter to millions this winter. While the Winter Fuel Payment is back for pensioners, five specific groups will miss out. Payments remain set between £200 and £300, with age and income tests, and letters are due in October and November confirming who gets what.

Who is eligible this winter

The DWP says people in England and Wales born before 22 September 1959 can qualify for a Winter Fuel Payment in 2025–26. Eligibility now also depends on having taxable income of £35,000 or less. The payment aims to help older people with higher winter energy use.

Born before 22 September 1959 and living in England or Wales? Expect a letter in October or November confirming a £200–£300 award, subject to the £35,000 income limit.

The five groups who will not receive the payment

Even if you meet the age and income criteria, you will not receive a Winter Fuel Payment this year if any of these apply:

• You live outside England and Wales.
• You were in hospital receiving free treatment for the whole week of 15–21 September 2025, and for the equivalent week the previous year.
• You need permission to enter the UK and your visa or leave specifies no recourse to public funds.
• You were in prison for the whole week of 15–21 September 2025.
• You live in a care home.

Care home rule and benefits interaction

The care home rule has a critical caveat. You will not be eligible if both of the following apply: you receive a means‑tested benefit (Universal Credit, Pension Credit, Income Support, income‑based JSA, or income‑related ESA) and you lived in a care home continuously from 23 June 2025 or earlier. If you live in a care home but do not meet both conditions, check your letter carefully and contact DWP if your circumstances differ from those listed.

How HMRC will recover payments above the income threshold

If your taxable income for the year exceeds £35,000, HMRC will recover the Winter Fuel Payment through the tax system. You will still get the notification letter, but you should plan for the clawback.

• Your tax code may change for the 2026–27 tax year to collect the amount.
• Alternatively, HMRC may add the amount to your 2025–26 Self Assessment bill.

If your taxable income is above £35,000, budget as if you will repay the £200–£300 via your tax code or Self Assessment.

Example: if you receive a £200 payment and your income is £40,000, HMRC will either adjust your 2026–27 tax code to recover £200 over the year or add £200 to your 2025–26 Self Assessment balancing payment.

Key dates at a glance

• Qualifying week referenced by DWP: 15–21 September 2025.
• Letters: expected in October and November 2025.
• Income test: taxable income must be £35,000 or less to keep the payment.

The energy bills backdrop facing households

Household energy debt has risen to an eight‑year high ahead of winter. Around 3.5 million households owe their supplier money—up 46% on last year—with an average debt of £223. Last year, the average energy account stood £128 in credit before winter; this year that has fallen to £98, the first time it has dipped below £100 since the energy crisis began. Among those who do hold a credit balance, the average has slipped from £222 to £214.

Uswitch research suggests more than two million low‑income households—and around 10 million homes in total—have no energy credit to cushion higher winter bills. Some indebted households say they cannot afford to clear balances, and a portion intend to move to prepayment meters as a way of managing debt.

Ofgem’s price cap increased by 2% on 1 October, lifting a typical direct‑debit dual‑fuel bill in England, Scotland and Wales from £1,720 to £1,755 a year. Many people plan to turn thermostats down and wear extra layers to keep usage in check.

Energy bills for a typical home now sit at about £1,755 a year, while household energy debt totals roughly £780 million.

What this means for you

The interaction between eligibility rules, the income threshold and HMRC’s recovery methods means two people of the same age can face very different outcomes. Some will receive the payment in full. Others will see it reclaimed through the tax system. A further group will not receive it at all due to residency, institutional stays, immigration status or care home rules.

Practical steps to take now

• Check your date of birth against the cut‑off: before 22 September 1959.
• Confirm your residency is in England or Wales during the qualifying period.
• Review your taxable income estimate for 2025–26 against the £35,000 threshold.
• Note any hospital or prison stays during 15–21 September 2025 and the same week last year.
• If you live in a care home, check whether you receive UC, Pension Credit, Income Support, income‑based JSA or income‑related ESA and whether you have lived there continuously since 23 June 2025.
• When your letter arrives, keep it safe and compare the stated amount with your circumstances.
• If over the threshold, set aside £200–£300 to avoid a tax surprise.
• Speak to your energy supplier early if you are in debt or struggling with payments.

Helpful context and examples

Public funds: if your immigration status says you cannot access public funds, Winter Fuel Payment counts as a public fund. That restriction blocks payment even if you meet the age test.

Hospital and prison stays: a full‑week stay covering the qualifying week means you do not qualify. Shorter stays or dates outside the week do not trigger the exclusion in the same way.

Moving home or country: eligibility hinges on where you live during the qualifying period. A move outside England or Wales before that week will usually end eligibility for this winter.

Budgeting example: a household expecting £300 but earning £36,500 should budget for HMRC to collect £300 through next year’s tax code or Self Assessment. Adjust monthly spending now to reduce pressure later.