Impact assessment

Income Tax charge on Winter Fuel Payments — Screening Equality Impact Assessment

Published 6 April 2026

Project objectives

This measure introduces a new charge equal to the full value of a Winter Fuel Payment or Pension Age Winter Heating Payment (a ‘winter payment’), received by pensioners who have a total income over £35,000.

HMRC will automatically recover the payment from pensioners with total income over £35,000 through PAYE tax codes unless they already file a Self-Assessment tax return.

Following announcements by the Scottish Government and Northern Ireland Executive, this tax charge will apply UK wide.

In PAYE for the 2026 to 2027 tax year, for a typical winter payment of £200, approximately £17 per month will be deducted from a customer. In the tax year 2027 to 2028, deductions will temporarily rise to approximately £33 per month for a typical payment of £200. This is because HMRC will be recovering payments for both the 2026 and 2027 winter payments in the tax year 2027 to 2028. This supports the transition to in-year recovery of payments, in line with normal PAYE practice. From the tax year 2028 to 2029 onwards, deductions will return to approximately £17 per month.

Self-Assessment customers will need to include the winter payment on their returns starting with the 2025 to 2026 tax return.

An online calculator is available on GOV.UK to help pensioners assess whether their income exceeds the total income threshold.

This impact assessment is in relation to the operational delivery of the changes. Further information on the policy can be found in the Tax Information and Impact Note (TIIN).

Customer groups affected

The customer groups that will be directly impacted by the change are:

• individuals over state pension age
• employers
• pension providers

What customers will need to do

There is no immediate action for customers to take with either DWP, Social Security Scotland (SSS) or HMRC. DWP/SSS will continue to:

• determine who is eligible to receive the winter payment
• pay the winter payment — this will happen automatically

The government has committed that no-one who was eligible to a winter payment in 2024-25 will become ineligible after these changes. To achieve this any customers who receive Pension Credit or other income-related benefits will not need to repay their charge even if their income is above £35,000. HMRC will rely on DWP and SSS data to administer this.

Individuals with total income over £35,000 will have a choice to:

• opt-out of getting the payment (via DWP / SSS) – this means the customer would not receive the winter payment and would never be liable for the charge
• receive the payment and pay a charge equal to the full value of their winter payment. HMRC will calculate this for the customer and recover it via the PAYE system unless they are in Self-Assessment, then the customer should include the payment on their tax return

The winter payment is awarded based on household circumstances (age of members) and in some circumstances the payment will be split between spouses/partners. 

The charge will apply to individual pensioners based on their own income (not the household income) and will be for the full amount of winter payment received by each pensioner. To keep the model simple, there is no taper – if your total income is above £35,000 (in the tax year you receive the winter payment), you must repay 100% of the winter payment you received. This could result in one household member keeping their part of the winter payment and another having to repay theirs. Winter payments remain a non-taxable payment.

There will be no formal route for DWP customers to return their Winter Fuel Payment (WFP) once it has been issued or to recognise and tell HMRC that it was been returned / cancelled. If customers do return it to DWP the tax charge will still apply.

HMRC will calculate the charge due. Customers in PAYE will have the charge added into their tax code automatically, a coding notice will be issued to the employer or pension provider to amend the persons tax code. For customers in Self-Assessment, they will be required to account for the charge in their relevant tax return — HMRC will pre-populate online tax returns with the winter payment amount where possible. Those who file paper Self-Assessment returns will need to include the payment manually.

Tax changes will apply from the 2025 to 2026 tax year, which will include payments made in winter 2025. DWP / SSS compile a list in around September before paying typically during November and December, however payments can be made up until the end of March. DWP will make secondary legislation to restore WFP eligibility in England and Wales to what it was prior to July 2024; a payment available to almost everyone, with some exceptions based on residency and full-time hospital residents.

HMT/HMRC will legislate in the next Finance Bill to introduce a charge to income tax which will apply to the individual with income over the threshold and receiving a Winter Fuel Payment in England, Wales and NI.

Assessing the impact

We assessed the impact on those in protected characteristic groups in line with the Equality Act and Public Sector Equality Duty; and Section 75 of the Northern Ireland Act:

• racial groups
• sex
• gender reassignment
• sexual orientation
• religion or belief
• pregnancy and maternity
• marriage and civil partnership
• people with dependents and those without
• political opinion (for Northern Ireland only)

There is no evidence to suggest there are any specific impacts on customers who share the following protected characteristics: race, sex, gender reassignment, sexual orientation, pregnancy and maternity, marriage and civil partnership, and political opinion (in Northern Ireland only), or people with dependants and those without (carers), which is not a protected characteristic but was also assessed.

The below characteristic groups may be impacted:

Disabled and not disabled

Impact on customers

There may be some customers who find the change confusing, whilst most will not have to do anything, they may receive coding letters (P2) that prompt them to call us or may cause confusion.

Proposed mitigation

For customers who are in PAYE only, there will be no action required and their tax code will be amended by their employer/pension provider.

Self-Assessment customers will have the winter payment auto populated where available on the return for the tax year relevant to the respective payment. Digitally excluded customers will be required to populate the correct box on the paper return, supplementary help sheets/notes will be updated to support those customers.

A range of communications and guidance products have been developed to help explain the changes in different formats, including a YouTube video, and shared through HMRC channels and via stakeholders.

HMRC are working towards a bespoke coding letter to inform the customer that the charge has been included in their updated tax code from April 2026.

Age

Impact on customers

This change impacts customers over 65 / State Pension age, there are associated digital capability nuances – this may affect the most appropriate comms routes to explain changes. Customers may receive coding letters (P2) that prompt them to call us or may cause confusion.

Proposed mitigation

For customers who are in PAYE only, there will be no action required and their tax code will be amended by their employer/pension provider. HMRC are working towards a bespoke coding letter to inform the customer of their code change from April 2026.

Self-Assessment customers will have the tax charge auto populated where available on the return for the tax year relevant to the respective payment.

Digitally excluded customers will be required to populate the correct box on the paper return, supplementary help sheets/notes will be updated to support those customers.

People who use different languages (Including Welsh language and British Sign language)

Impact on customers

There may be customers who, due to their disability, require additional support in dealing with HMRC. There is no evidence to suggest any specific impacts on those customers within this protected characteristic group.

Proposed mitigation

HMRC offers a Welsh language service to customers, where proportionate, in line with HMRC protocol. Forms on GOV.UK can be requested in Welsh. HMRC constructively engages external stakeholder groups and representative bodies in the delivery of changes.

For any customers whose first language is not English, alternative arrangements can be made for friends and family to interpret or speak on a customer’s behalf. HMRC can access interpretation services.

British Sign Language services can be provided via the Extra Support Services available to customers.

A range of communications and guidance products have been developed to help explain the changes in different formats, including a YouTube video, and shared through HMRC channels and via stakeholders.

Opportunities to promote equalities

We have considered opportunities to promote equalities and good relations between people in each of the protected characteristic groups and those outside of that group, none have been identified. HMRC will continue to constructively engage with customers to explore opportunities in the future.

A full Equality Impact Assessment is only required if potential major direct impacts are identified through the External Customer Screening Equality Impact Assessment. This measure does not introduce any change to the current reporting process.

A full Equality Impact Assessment is not recommended.