Millions of pensioners will be getting a payment of up to £300 from the Department for Work and Pensions (DWP) in the coming weeks.
The government will begin sending Winter Fuel Payments to people born before September 22, 1959, in November.
However, not everyone who gets the money will be allowed to keep it, as the government has placed an earnings threshold on the payment.
The government has estimated that around nine million pensioners will benefit from the payment this year after eligibility was widened. In the previous year, the payment was only handed out to people on certain benefits, such as Pension Credit.
This winter, everyone who has reached state pension age will be sent the payment, but those who have an annual income of more than £35,000 will subsequently have the payment recovered by HMRC.
The exception is those who have already opted out from getting the payment, who will not have the money land in their bank account at all.
The amount that a pensioner will receive is determined by their age and who they live with. Pensioners can expect to get a letter from the DWP outlining exactly how much they will get, with payments ranging from £100 to £300.
Pensioners who have an annual income of below £35,000 will be able to keep the money, but those who are above the threshold will have it taken back by HMRC.
HMRC has confirmed that it will recover the money from those who aren’t eligible for it in one of two ways, depending on how a person’s income is usually taxed.
For those on the PAYE tax system, the money will be recovered automatically. HMRC will change your tax code and deduct the money straight from your income over the 2026/2027 tax year.
For example, someone who had to pay back a Winter Fuel Payment worth £200, would see approximately £17 per month deducted.
For those who do a Self Assessment tax return, the payment can be added on.
If you file your tax return online, HMRC will include the payment automatically on your 2025 to 2026 tax return, which is due by January 31 2027. However, if you file a paper tax return, you will need to include the payment on your 2025 to 2026 tax return, which is due by October 31 2026.
The Winter Fuel Payment cannot be paid back any other way or any sooner.
The gov.uk website has an online portal that can be used to find out whether or not you can keep your Winter Fuel Payment, and if not, how you must pay it back. You can find it here.
The government has been warning pensioners to watch out for Winter Fuel Payment scams and not engage with suspicious messages.
Fraudsters have been known to send messages purporting to be from government officials processing applications for the payment.
But the government has issued advice to clarify that the payments are made automatically, and it will never ask for bank details by text.
Anyone who receives a text message inviting them to apply for a payment should not engage with it and instead forward it to 7726, the government has said.
Work and pensions secretary Pat McFadden said: “If you get a text message about winter fuel payments, it’s a scam. They will be made automatically so you do not need to apply. These despicable attempts by criminals to target people are on the rise.”
People who believe they may have been scammed should tell their bank and the police.