Government planned significant cut to Winter Fuel Payment eligibility

The government planned to significantly cut eligibility for the Winter Fuel Payment in July 2024, a move that drew widespread criticism and was followed by a u-turn under which all pensioners continue to receive the payment¹. Under the revised approach, pensioners with an income of £35,000 per year or above, approximately 1.5 million people, will have the payment clawed back in the following tax year, which means nine million pensioners in England and Wales will be eligible¹.

The Winter Fuel Payment is an annual, tax free lump sum payment of £200 to £300, and before 2024-25 anyone who had reached state pension age was eligible¹. It will cost £1.25 billion per year, funded through general taxation¹. A Winter Heating Payment is also available for those living in Scotland who receive certain benefits¹. The eligibility rules now turn on income rather than pension age alone.

Separately, the Warm Home Discount is being expanded. From October 2025 it will provide a £150 annual rebate to all households in receipt of means tested benefits, removing the previous "high cost to heat" eligibility threshold¹. This means 6.1 million households across Britain on means tested benefits will be eligible for support in the winter of 2025-26, increasing the number of households helped by 2.7 million¹. The expansion will add £37 to each household's bill per year through a levy on the standing charge, costing £1 billion in total, with the cost passed onto all consumers through their energy bills¹. The Warm Home Discount and Winter Fuel Payment now differ in both value and how they are funded.

The report also notes that the government plans to mandate all suppliers to offer at least one low or zero standing charge tariff from early 2026¹. Minimum energy efficiency standards for the rented sector are set to apply from 2028 for new tenancies, and to all tenancies from April 2030¹.

"The government planned to significantly cut eligibility in July 2024, but this led to widespread criticism. After a u-turn, all pensioners will continue to receive the WFP"

Why it matters for households

For pensioner households, the practical effect of the u-turn is that the payment continues regardless of pension age, but the £35,000 income threshold introduces a clawback for higher earners in the following tax year, so the net value of the payment depends on total income rather than age alone¹. For households on means tested benefits, the expanded Warm Home Discount widens eligibility beyond those with high heating costs, but the £37 annual addition to standing charges applies to all households, including those who do not receive the rebate¹. The report states that flat rate support through the two schemes has not kept pace with inflation or protected households from price volatility¹. It adds that the government is preparing to publish a Warm Homes Plan and a revised Fuel Poverty Strategy¹. Further detail on the regulation and policy framework behind these schemes, and on grants and schemes more broadly, is set out in the report.

What happens next

The Warm Homes Plan is due to be published in October 2025¹. The expanded Warm Home Discount applies from October 2025, and the report states the scheme is set to expire in 2026, with the government needing to decide what comes next¹. The report says both the Warm Home Discount and Winter Fuel Payment are set to end in 2028¹. The mandate for suppliers to offer a low or zero standing charge tariff is planned from early 2026¹. Minimum energy efficiency standards for rented homes apply from 2028 for new tenancies and from April 2030 for all tenancies¹.

Sources2 cited

1. Affording-warm-homes.pdf, green-alliance.org.uk
2. Affording-warm-homes_The-case-for-a-social-tariff-to-address-fuel-poverty.pdf, company.ovo.com