Millions of pensioners are set to receive help with their heating bills this winter as the Labour Government expands eligibility for the Winter Fuel Payment.
Everyone over the state pension age in England and Wales with an income of £35,000 or less a year will now receive the payment.
This change will offer certainty and targeted support to those on lower and middle incomes.
The Chancellor confirmed that around nine million pensioners will benefit under the new rules, representing over three quarters of all pensioners in England and Wales.
The support, which is worth £200 per household, or £300 where someone is aged 80 or over, will be paid automatically this winter.
For those with incomes above the £35,000 threshold, the payment will still be issued but then recovered via HMRC, either through PAYE or a Self-Assessment return.
Pensioners above the threshold who prefer not to receive the payment at all will also be given the option to opt out, with details on how to do so expected to follow.
The Treasury said: “This change gives people certainty and ensures that payments can be made in time for this winter.
“Payments will be better targeted than before 2024-25, when they were previously paid to all pensioners regardless of their income, meaning those on lower and middle incomes will still receive the help they need.”
To be eligible for the Winter Fuel Payment, a person will need to have reached state pension age by the week starting September 15 this year.
Devolved authorities in Scotland and Northern Ireland will each receive a funding uplift so they too can meet the new threshold.
This change will offer certainty and targeted support to those on lower and middle incomes
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The new policy introduces means-testing to what was previously a universal benefit, a move the Treasury says will make the system fairer while protecting vulnerable pensioners.
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.”
The new threshold is set above the income level of pensioners in poverty and is broadly in line with average earnings, according to the Treasury. The aim is to strike a balance between helping those in need and ensuring fairness to the taxpayer.
The new threshold is set above the income level of pensioners in poverty and is broadly in line with average earnings, according to the Treasury
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The changes will cost around £1.25 billion in England and Wales. However, by means-testing the Winter Fuel Payment, the Treasury expects to save approximately £450 million, subject to confirmation by the Office for Budget Responsibility (OBR).
The costs will be accounted for at the Budget and incorporated into the next OBR forecast.
The Chancellor will take decisions on funding in the round at that forecast to ensure the government’s non-negotiable fiscal rules are met. This will not lead to permanent additional borrowing.
Officials estimate that around two million people over state pension age in England and Wales have taxable incomes above £35,000, meaning they will no longer receive the benefit outright. However, they will still be sent the payment initially, with the money then reclaimed by HMRC.
The Government has stressed that no one needs to register or take action to receive or repay the support, and the recovery process will happen automatically.
The decision to limit the Winter Fuel Payment to only those who claimed pension credit was one of Labour’s first acts in Government, aimed at balancing what was described as a £22 billion “black hole” in the public finances.
This meant the number of pensioners receiving the payment was reduced by around 10 million, from 11.4 million to 1.5 million.
But Sir Keir Starmer announced there would be a partial U-turn on the policy in May, after it was thought to have contributed to Labour’s drubbing in the local elections.
The changes will cost around £1.25 billion in England and Wales
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Alongside the Winter Fuel Payment changes, over 12 million pensioners across the UK will also benefit from the Triple Lock, with their State Pension set to rise by up to £1,900 during this parliament.
The move marks a significant shift in how pensioner benefits are delivered, moving from universality to targeted support, but the Chancellor insists that no one who genuinely needs help will be left out. S
Some two million pensioners who earn more than £35,000 will see their winter fuel payments clawed back via the taxman, the Treasury estimates.
Kemi Badenoch, Leader of the Opposition, claimed the Prime Minister had “scrambled to clear up a mess of his own making”.
The Conservative leader added: “I repeatedly challenged him to reverse his callous decision to withdraw winter fuel payments, and every time Starmer arrogantly dismissed my criticisms.
“This humiliating U-turn will come as scant comfort to the pensioners forced to choose between heating and eating last winter. The Prime Minister should now apologise for his terrible judgment.”
