Millions of older people will have to return some of their winter fuel payment to the Government in tax.
Under new rules, everyone over state pension age will get between £200 and £300 this winter to help with heating bills.
But pensioners with an annual income of more than £35,000 will have to hand it back through the tax system.
It means many will see the cash land in their bank account in November or December – only to disappear when their tax bill is worked out.
For the first time since the payment was introduced in 1997, the allowance is no longer guaranteed for all. The Treasury says the changes will save £450million a year by cutting off around two million better-off pensioners.
Chancellor Rachel Reeves announced the new system in June after anger at plans to axe the benefit for millions.
Campaigners say the tax clawback will confuse many people, especially those just over the threshold.
Alice Haine, from Bestinvest, said: “For pensioners earning just above the £35,000 threshold, the latest news will be disappointing.
« Some may even choose to reduce their income from private pensions if it means they can just skim under the threshold to receive the payment.”
Sarah Coles, of Hargreaves Lansdown, added: “The balance of property assets and pension income for older people can leave them wealthy on paper and yet seriously strapped for cash on a daily basis. In the short term, things like the winter fuel payment can help.”
Those who didn’t want the cash clawed back were able to opt out by filling in a Government form online by midnight yesterday, or by calling 0800 731 0160 before 6pm yesterday.
The allowance will be paid automatically to those who qualify.
Under-80s get £200; over-80s get £300. Where couples live together, the money is split – but the tax clawback is applied individually.
That means if one pensioner in a household earns over £35,000 but their partner doesn’t, only their share will be taken back. If both are above the threshold, the entire payment will be lost.
Campaigners warn the change risks creating another “child benefit-style trap”, with older people caught out by complicated rules and unfair tax grabs.
