HMRC Gains New Authority to Access Bank Accounts

The UK government is set to implement significant changes to the Winter Fuel Payment, also referred to as the Pension Age Winter Heating Payment in Scotland. Starting November, the payment will continue to be distributed automatically to individuals aged 66 and older to assist with heating expenses.

Changes to Eligibility and Payment Structure

Key changes include the introduction of an income cap. Those earning more than £35,000 annually will no longer qualify for the payment. Instead of withholding payments beforehand, the government plans to issue payments to all eligible recipients first. Recoveries will be made later through the tax system.

• Approximately 2 million individuals are expected to be impacted.
• The average repayment amount is estimated to be up to £300.

This repayment will not be directly deducted from bank accounts. Instead, HM Revenue and Customs (HMRC) will reclaim the funds through the following methods:

Reclaim Methods

• Pay As You Earn (PAYE): Deductions will occur monthly from salary or pension income.
• Self Assessment: The repayment amount will be added to the subsequent year’s tax bill for those who file tax returns.

Future Adjustments in Payment Collection

In 2027, the payment collection process will undergo further modifications. HMRC intends to collect two payments that year, one to recoup overpaid support from 2026, and another for the 2027 payment. This could result in individuals facing deductions of up to £600 throughout the year.

The government emphasizes that this new approach helps to prevent delays in recovering overpayments and keeps the system current.

Payment Deduction Estimates

A HMRC spokesperson provided insights on the expected deductions:

• For PAYE customers, a typical payment of £200 will see a deduction of approximately £17 per month.
• In the 2027-2028 tax year, this will increase to about £33 per month due to the collection of payments from both 2026 and 2027.
• By the 2028-2029 tax year, deductions will revert to about £17 per month.

If individuals are concerned about exceeding the £35,000 income limit, they can choose to opt out of receiving the 2026 Winter Fuel Payment. Information about opting out will be available on gov.uk or mygov.scot starting April 1, 2026. Additionally, options to opt out will be accessible via phone or mail.