In a significant policy reversal, the UK government has announced an expansion of the Winter Fuel Payment (WFP) eligibility, restoring support to around nine million pensioners in England and Wales for the winter of 2025-2026. This move comes after widespread criticism of last year's drastic cuts, which had limited the payment to only those receiving Pension Credit, leaving millions without this vital assistance.
The Winter Fuel Payment, a tax-free benefit designed to help older people with heating costs during the colder months, had seen its reach slashed from 8.5 million pensioner households in 2023-24 to just 1.5 million last winter due to the government's means-testing policy. The cost of universal entitlement had been £2.0 billion, but last year’s restrictions excluded approximately 85% of pensioner households from receiving the payment.
Chancellor Rachel Reeves defended the initial means-testing introduced in 2024, describing it as a necessary, albeit tough, decision to address a £22 billion gap in public finances inherited from the previous administration. However, acknowledging public concern and political pressure, Reeves announced on June 9, 2025, that the eligibility threshold would be raised, allowing pensioners with annual incomes of up to £35,000 to receive the payment automatically this winter. Those with incomes above this threshold will still receive the payment but will have to repay it through the tax system.
"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," Reeves stated. "But we have now acted to expand the eligibility of the Winter Fuel Payment so no pensioner on a lower income will miss out." The Treasury estimates that this change will benefit over three-quarters of pensioners in England and Wales, covering approximately nine million individuals.
Under the new scheme, pensioners who have reached state pension age by the qualifying week of September 15-21, 2025, and who reside in England or Wales, will be eligible. The payment amounts to £200 per household with a pensioner under 80, or £300 for households with someone over 80. The Department for Work and Pensions (DWP) will develop a system allowing pensioners to opt out if they do not wish to receive the payment, while Her Majesty's Revenue and Customs (HMRC) will recover payments from higher-income recipients via Pay As You Earn (PAYE) or self-assessment tax returns.
This approach mirrors the child benefit system’s taper, where higher-income families repay benefits through taxation. However, experts caution that such means-testing adds complexity. The Institute for Fiscal Studies (IFS) highlighted concerns that this system could be difficult for pensioners to navigate, especially older individuals who may face cognitive challenges. The IFS also warned that unless the income threshold is set relatively low, savings to the government would be minimal due to the generally lower taxable incomes among pensioners compared to working-age adults.
For example, setting the ineligibility threshold at the higher-rate tax band of £50,270 would exclude only 11% of pensioner households, saving about £200 million annually compared to universal entitlement. To achieve more significant savings, the government would need to lower the threshold substantially — a £30,000 limit would exclude 30% of pensioner households and save approximately £600 million. A £20,000 threshold would split eligibility roughly in half. The current £35,000 threshold represents a compromise, expanding access while maintaining some fiscal control.
Despite the restoration of payments to many, the government has ruled out returning to full universality, citing fiscal responsibility. The Treasury projects the cost of the expanded eligibility at £1.25 billion, though details on funding this increase will be outlined in the Autumn Budget 2025. Fiscal experts warn that this may necessitate tax increases or spending cuts elsewhere.
The political reaction has been mixed. Tory leader Kemi Badenoch described the U-turn as "humiliating" and called for an apology from the Prime Minister. In contrast, the Green Party's Carla Denyer welcomed the decision as a "huge relief," while Liberal Democrat leader Ed Davey stated the government had "finally realised how disastrous this policy was." Charities supporting older people also praised the move, emphasizing the importance of helping pensioners cope with rising living costs.
The policy change also affects devolved administrations. Although Winter Fuel Payments are devolved in Scotland and Northern Ireland, the UK Treasury confirmed that these regions would receive a mechanical uplift in funding to match the new eligibility criteria. Scotland, which saw a £140 million funding cut last year due to the UK government's restriction of the payment to Pension Credit recipients, is expected to receive over £100 million in additional funds.
The Scottish government has already introduced a separate Winter Heating Payment for all pensioners in Scotland, with qualifying benefit recipients receiving £200 or £300, and other households receiving £100. However, Scotland's Social Justice Secretary, Shirley-Anne Somerville, expressed concern that many pensioners might still miss out under the UK government's revised policy and criticized the lack of consultation with the Scottish government. She called the initial cuts a "betrayal" and urged the UK government to share details promptly to assess the implications for Scotland's budget and programs.
Scottish Labour's Social Security spokesperson Paul O’Kane welcomed the increased funding but urged the Scottish National Party (SNP) to reconsider plans that could disadvantage poorer pensioners. He emphasized the need for payments to reach those most in need and to avoid redistributing funds to wealthier individuals at the expense of vulnerable groups.
While the government’s expanded eligibility for the Winter Fuel Payment represents a significant shift from last year's austerity measures, it also underscores the complexities of balancing fiscal responsibility with social support. The means-testing approach, though intended to target assistance fairly, carries administrative challenges and potential hardships for pensioners navigating the system. As the winter approaches, millions of pensioners will receive vital help with heating costs, but questions remain about the long-term sustainability and fairness of the policy.
