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State pensioners receiving new 'earnings limit' tax codes

Newsletter issue – August 2026

HMRC is sending updated tax codes to state pensioners who exceeded the earnings limit for the Winter Fuel Payment. These letters began going out in June.

The Winter Fuel Payment (£200 - £300 depending on age) was paid to everyone, but around two million pensioners who earned above £35,000 must now repay it via tax adjustments.

Pensioners will receive a letter or HMRC app notification when their tax code changes. HMRC will review tax paid versus tax due, and if the full amount cannot be collected, they will issue a tax calculation afterwards.

HMRC will automatically reclaim the payment by adjusting PAYE tax codes for affected pensioners, unless they file Self-Assessment returns. Pensioners cannot repay early; they must wait for HMRC to collect it through future tax codes.

Repayment will occur in the 2026 - 27 tax year, recovering the payment made in 2025 - 26. As an example: a £200 payment will mean roughly £17 extra tax per month until repaid.

HMRC says most repayments will be handled automatically through tax codes, while Self-Assessment users will repay via their tax return.