Question to the HM Treasury:

To ask His Majesty's Government, further to the Written Answer by Baroness Sherlock on 18 June (HL7933), what would be the anticipated net revenue gain from taxing the Winter Fuel Payment.

The Government has been clear that it wants more pensioners to benefit from Winter Fuel Payments. More than three quarters - the vast majority of pensioners - will benefit from a Winter Fuel Payment. The threshold is also broadly in line with average earnings and ensures the means testing of Winter Fuel Payments has no effect on pensioner poverty.

Taxing the Winter Fuel Payment would go against the general rule that income replacement benefits are taxable but those such as Winter Fuel Payments, which are designed for specific costs, generally are not.

The Winter Fuel Payment remains tax free, ensuring those pensioners on lower and middle incomes receive the full benefit of the Winter Fuel Payment, which would not be the case if it was a taxable payment. The new £35,000 threshold ensures those pensioners with the highest incomes do not benefit from the payment and ensures fairness for both pensioners and taxpayers.

There are about 2 million pensioners with an income above £35,000. Based on 2023-24 data, the last publicly available estimates of this data, about 750,000 pensioners were higher rate tax payer and around 90,000 were additional rate tax payers.

Our Winter Fuel Payment policy is in line with our wider welfare reforms – ensuring support is targeted and that it is a responsible use of taxpayers’ money.