State pensioners earning just £23,027 and 1p will lose their winter fuel payment of £200 or £300 this winter under the new rules being put in place by government.

The old unpopular Pension Credit eligibility rules introduced last year have now been scrapped, and will this coming winter be replaced by a new universal winter fuel payment for all state pensioners.

The catch is that this time, those earning too much money – more than £35,000 – will automatically lose their winter fuel payment again as the money will be taken back from you in tax.

However, money you receive in your state pension counts towards the £35,000 threshold. And for a state pensioner on the new, full state pension, that means you’re already earning £11,973 a year towards the threshold just by collecting your state pension every week.

Money expert Martin Lewis has set out what counts towards the £35,000 threshold for winter fuel payment eligibility in the new rules.

He stressed that state pension income does count towards the £35,000 threshold, and you will lose the entire winter fuel payment if you go even 1p over the threshold.

Speaking on the latest Martin Lewis Podcast, he explained: “This is a cliff edge. If you earn £35,000 and 1p, you lose the entire £200. It is not a graduated scheme, it’s a cliff edge scheme, it’s all or nothing.

“It is all of your earnings that are subject to Income Tax. That is any private pension, any state pension income, any employment income, any savings interest outside of an ISA.”

While there are benefits that don’t count towards the threshold, such as PIP, Pension Credit and Disability Living Allowance, collecting the full state pension would leave you with just £23,027 of your £35,000 left.

It would mean you can only earn another £23,027 and 1p more in the same tax year without going over the ‘cliff edge’ and losing your entire winter fuel payment. Other earnings could be from a job, rental income, savings interest or a private workplace pension or annuity.

The threshold is though, much higher than the 2024’s Pension Credit rules, which removed the winter fuel payment from those earning about £11,600.

Pensioners above the £35,000 threshold will have the full amount of the winter fuel payment they received automatically collected via PAYE, or via their Self-Assessment return. No one will need to register with HMRC for this or take any further action. Pensioners who want to opt out and not receive the payment at all, will be able to do so, with details to be confirmed.