Martin Lewis Says You Might Want to Say No to Winter Fuel Payment or Risk Paying It All Back

Martin Lewis has sounded the alarm over the government’s newly reinstated winter fuel payment scheme, warning some pensioners could be better off turning it down altogether.

The scheme, brought back by Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves, is meant to support pensioners with rising heating costs through the colder months. But there’s a major catch this time around, and Martin didn’t hold back in explaining it on his latest BBC Sounds podcast episode, reported Birmingham Live.

It turns out that anyone with an income over £35,000 could end up having to pay the full amount back through tax. Unlike other support schemes that taper off gradually, this one hits a hard stop — a “cliff edge,” as Martin called it.

He took a call from a listener named Denise, who asked a straightforward but important question. “If your total income is over the £35,000 threshold and therefore your winter fuel payment is to be clawed back through PAYE or self assessment, will the whole sum of £200 be clawed back or only a percentage?”

Martin didn’t sugarcoat it. “Let’s say you earn £40,000 of taxable income. You’re due to get the £200 payment. Will you, because you’re a basic rate taxpayer, lose 20 per cent of that income? No. If you earn £35,000 and a penny, you lose the entire £200,” he said. “It is not a graduated scheme, it is a cliff edge scheme.”

So what should pensioners with higher incomes do? Denise also asked whether it might be simpler just to opt out. Martin’s answer was clear: “Possibly yes,” he said, adding that for someone in her situation — single, of state pension age but under 80, and with an income over the threshold — opting out “is the simplest thing to do once you are able to do so.”

And while the government hasn’t released all the details yet on how exactly people can opt out, Martin said there doesn’t seem to be any reason why someone like Denise would want to receive the payment only to have it taken back through their taxes.

“I give myself the slight caveat in that the opt out details aren’t published yet,” he said. “And when they publish it there might be a reason, but at the moment I can’t see any reason.”

In short, if you’re a pensioner with income just over that £35,000 mark, you could end up with nothing to show for the winter fuel payment — and worse, you might have to go through the hassle of paying it back later if you don’t take action. Martin’s advice? Keep a close eye on the opt out option and don’t assume the money is yours to keep unless you’re under the threshold.

Don’t Miss These: