This winter, around nine million pensioners in England and Wales will receive Winter Fuel Payments, as the government extends eligibility to all pensioners with an income of £35,000 or less per

year. This change means that over three-quarters of pensioners will now benefit from the payment.

The £35,000 income threshold is set well above the poverty line and aligns with average earnings. The aim is to support those on lower incomes while ensuring the system remains fair for taxpayers.

The updated policy will cost around £1.25 billion in England and Wales. However, introducing means-testing for the benefit is expected to save approximately £450 million compared to the previous universal system. These figures are subject to certification by the Office for Budget Responsibility (OBR) and will be included in the government’s next Budget. The Chancellor will make final decisions on funding at that time, ensuring that the government’s fiscal rules are upheld without leading to permanent additional borrowing.

No action is required from pensioners. Payments will be made automatically this winter. Those with incomes above the £35,000 threshold will have the amount recovered through the HMRC system—either via PAYE or Self-Assessment. The payments will be £200 per household, or £300 if someone in the household is over 80 years old.

In addition, over 12 million pensioners across the UK will benefit from the State Pension Triple Lock, which is set to raise pensions by up to £1,900 over this Parliament.

Chancellor of the Exchequer Rachel Reeves said:

“Targeting Winter Fuel Payments was a tough decision, but the right decision because of the inheritance we had been left by the previous government. It is also right that we continue to means-test this payment so that it is targeted and fair, rather than restoring eligibility to everyone including the wealthiest. 

But we have now acted to expand the eligibility of the Winter Fuel Payment so no pensioner on a lower income will miss out. This will mean over three quarters of pensioners receiving the payment in England and Wales later this winter”.

Pensioners with incomes above £35,000 will see the full payment automatically reclaimed via the tax system. Those who prefer not to receive the payment at all will have the option to opt out, with further details to be announced.

These changes are designed to provide clarity and ensure timely payments ahead of the cold season. The new approach replaces the previous universal system and better targets support to those most in need, promoting both social fairness and responsible use of public funds.

Approximately two million people in England and Wales above State Pension age have taxable incomes over £35,000 and will be subject to repayment under the new system. Photo by Stephen Richards, Wikimedia commons.