DWP announces it will offer £300 payment to millions in one income bracket
DWP announces it will offer £300 payment to millions in one income bracket
The government has confirmed more people will get support - here is everything you need to know
Millions of people will get a winter fuel payment this year in a major government U-turn
(Image: Getty )
In a significant policy reversal, millions of individuals will receive a winter fuel payment this year. It has been confirmed that pensioners earning £35,000 or less will be eligible for a payment of up to £300.
This slightly reverses a policy implemented previously which introduced means-testing for the payment. This change drastically reduced the number of pensioners receiving the aid from 11.4 million to approximately 1.5 million.
The payment, typically distributed in November or December to assist with heating costs during the chillier months, had previously been automatic. The alteration was widely attributed to the Labour Party's plummeting public support following its general election win. For money-saving tips, sign up to our Money newsletter here
Earlier this year, the government hinted at a partial U-turn, stating that more people would receive the payment but did not provide further details until now. With the new adjustments, around nine million individuals will now qualify for the payment, costing £1.25bn.
This is expected to be offset by reclaiming the payment from higher-income pensioners through HMRC.
Here are the changes you need to know about and who will qualify under the new rules.
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What are the current rules for the winter fuel payment and what changed in 2024/25?
Winter fuel payments, previously a universal benefit for everyone over the state pension age, are undergoing significant changes. The newly elected Labour-led government last year declared that it would introduce means tests, limiting payments to individuals on benefits and pension credit as a cost-saving measure.
The move faced substantial backlash, accused of adversely affecting the most vulnerable, and was believed to have influenced the party's devastating performance in the local elections.
However, there's been a shift in stance recently. Chancellor Rachel Reeves confirmed an adjustment to the approach, indicating that more pensioners will be eligible for the winter fuel allowance this year, though it will not be extended to everyone.
Reeves relayed to journalists at a briefing, "more people will get winter fuel payment this winter" and promised that additional information would be made available "as soon as we possibly can."
What's changing under the updated regulations?
This Monday, June 9, it was officially announced that any pensioner in England and Wales earning £35,000 or less annually is entitled to receive the winter fuel payment. This amendment expands coverage to a vast number of pensioners – about nine million or roughly three-quarters – as per the statements from ministers.
The upcoming changes are set to cost approximately £1.25 billion in England and Wales, with the introduction of means-testing for the Winter Fuel Payment expected to save around £450 million, pending approval from the Office for Budget Responsibility compared to the current system of universal payments. These costs will be factored into the forthcoming Budget and included in the next OBR forecast.
In response to queries about how these adjustments will be financed, the government has stated that it will "take decisions on funding in the round at that forecast to ensure the government's non-negotiable fiscal rules are met", and emphasised that this would "not lead to permanent additional borrowing."
There is no need for individuals to take any action, as those eligible will automatically receive the payment this winter. For those with incomes above the threshold, the funds will be reclaimed by HMRC.
The automatic payment of £200 per household, or £300 for households with someone over 80, will be distributed this winter. Additionally, over 12 million pensioners throughout the UK will gain from the Triple Lock, which promises a State Pension increase of up to £1,900 during this parliament.
The Chancellor, Rachel Reeves, has made it clear that the government's choice to target Winter Fuel Payments was a challenging yet necessary measure considering the situation inherited from the previous administration.
She 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. This will mean over three quarters of pensioners receiving the payment in England and Wales later this winter."
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For those pensioners above the £35,000 earnings mark, approximately two million throughout England and Wales, the full amount of the winter fuel payment they are due will be systematically reclaimed via the PAYE system or through their self-assessment tax return. No one will be required to contact HMRC for registration or any additional steps in this process.
There will also be an option for pensioners who prefer to forego the payment entirely, with forthcoming details on how to opt out.
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