Paying back Winter Fuel Payment to HMRC

H M Revenue & Customs (HMRC) have released new guidance on how they will recovery excess payment of Winter Fuel Payment.

The Winter Fuel Payment is automatically paid to individuals of state pensioner age. However, it is repayable if you have more than £35,000 pa of taxable income.

Taxable income includes:

• State Pension

• Taxable state benefits

• Company and personal pensions

• Wages and salary from employment

• Profits from self employment

• Profits from property rental

• Interest from savings

• Dividends from company shares

If your taxable income in a tax year is:

• £35,000 or less then you will keep all the Winter Fuel Payment

• More than £35,000 then you will have to repay all the Winter Fuel Payment to HMRC.

  
  

If you live with someone else who also receives the Winter Fuel Payment, HMRC will look at each person’s individual taxable income separately. Therefore, if your taxable income is £36,000 and the other person’s taxable income is £22,000, HMRC will require repayment of your Winter Fuel Payment, but the other person, with income under £35,000, will keep all their own Winter Fuel Payment.

The Winter Fuel Payment is repayable to HMRC through your Self Assessment Tax Return, if you are required to file a Tax Return in the year.

For other people, who do not file a Tax Return, HMRC will collect any overpayment directly.  This may be through your PAYE code, in the following tax year, or by sending a tax bill.

If you are outside of the Self Assessment system, HMRC will check your tax and any Winter Fuel Payment repayment. The letters are sent out between June and March after the end of the tax year, on 5 April each year.

If you have paid too much or too little tax and /or Winter Fuel Payment at the end of the tax year, and do not completed a Self Assessment Tax Return each year, HMRC will send you either:

• a P800 (PAYE tax calculation letter), or

• a SA302 (Simple Assessment letter and tax calculation)

This will tell you how to get a tax refund or how to pay any tax you owe. You will have to pay the amount due by a deadline.

You might receive a SA302 Simple Assessment letter, rather than a P800 tax calculation, if you owe more than £3,000 in tax or the tax due cannot be collected automatically through your salary or pension.

If the Winter Fuel Payment is collected through your tax code then you will repay it, and another net tax due, the following tax year as you receive your salary or non-state pension. The typical monthly repayment of the £200 pa Winter Fuel Payment would be £16.66 pm.

New HMRC guidance states that you cannot repay back the overpaid Winter Fuel Payment any sooner or by any other method. The guidance includes an online calculator to help you work out if your taxable income for the tax year exceeds the £35,000 threshold.