Reactive (response to change)

Winter Fuel Payment Charge: what employers need to know about revised PAYE codes from July 2026

SI 2026/610 inserts regulation 14BA into the PAYE Regulations 2003, enabling HMRC to collect the new Winter Fuel Payment Charge through adjusted tax codes from 7 July 2026. Employers with pensioner employees or directors will receive revised P9 coding notices and simply apply them — no new reporting obligations arise.

Change event: Income Tax (Pay As You Earn) (Amendment No. 2) Regulations 2026 Effective 7 July 2026

Related guidance

Topics

PAYE & Payroll Running Payroll HMRC Compliance

What SI 2026/610 does

The Income Tax (Pay As You Earn) (Amendment No. 2) Regulations 2026 (SI 2026/610), made 5 June 2026 and in force 7 July 2026, amends the Income Tax (Pay As You Earn) Regulations 2003 by inserting a new regulation 14BA.

The amendment gives HMRC the power to issue adjusted tax codes so that the Winter Fuel Payment Charge — a means-tested clawback introduced by Schedule 10 to the Finance Act 2026, which inserted section 681I into the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) — is collected through PAYE during the 2026–27 tax year. The parent power for the instrument is section 684 of ITEPA 2003. The instrument applies to the whole of the United Kingdom.

Without this amendment, HMRC would have had to collect the charge solely through Self Assessment or post-year adjustments. Regulation 14BA brings the collection mechanism in line with how other income-affecting charges are handled through the existing coding process.

SI reference
SI 2026/610
In force
7 July 2026
Tax year affected
2026–27
Charge threshold
Pensioners with total income above £35,000
Inserted provision
Regulation 14BA, PAYE Regulations 2003
Underlying charge
Section 681I ITEPA 2003 (Finance Act 2026, Schedule 10)

Who the charge falls on — and who it does not

The Winter Fuel Payment Charge is a charge on individual pensioners, not on their employer. It applies to those who receive a Winter Fuel Payment and have total income above £35,000 in the 2026–27 tax year.

HMRC identifies affected individuals and adjusts their tax code accordingly. The charge is recovered through the deductions the employer already makes under PAYE — it is not a separate levy, a new payroll cost, or an employer liability of any kind.

The employer's only involvement is operating the revised tax code that HMRC issues. This is the same process used for other HMRC coding adjustments, such as the collection of underpaid tax or the clawback of the High Income Child Benefit Charge.

What your payroll must do — and nothing more

When HMRC issues a revised tax code for an affected employee or director:

  • Apply the new tax code in your payroll software.
  • Deduct income tax at the revised rate from the next payment.
  • Report deductions through Real Time Information (RTI) as normal — no new data items are required.

There is no new employer registration, no new RTI submission type, and no separate payment to HMRC. If your payroll software is up to date and you apply revised codes when you receive them, you are fully compliant.

How you will receive revised codes

HMRC issues coding changes in two ways:

  • P9 (bulk coding run): Annual notices sent before the start of a tax year, or as a mid-year batch.
  • In-year P9 notices: Individual coding change notices sent electronically through your payroll software or PAYE Online when HMRC updates a code during the year.

Most payroll software downloads new codes automatically if you have electronic coding notifications enabled. Check your software settings to confirm this is active from 7 July 2026 onwards.

Practical steps for employers

Most employers will need to take minimal action. The steps below cover the small number of cases where you have pensioner employees or directors who may be affected.

  • Check electronic notifications are enabled. Ensure your payroll software is configured to receive PAYE coding notices electronically so revised codes are applied promptly.
  • Apply revised codes when received. From 7 July 2026, if you receive a revised P9 or in-year coding notice for an employee, apply it at the next practicable pay run.
  • Direct employee queries to HMRC. You cannot change a tax code without HMRC authorisation. If an employee disputes their code, direct them to their Personal Tax Account on GOV.UK or advise them to contact HMRC directly.
  • No action needed for employees unaffected. If you do not employ pensioners above the £35,000 income threshold, you are unlikely to receive any revised codes in connection with this change.

Overpayments are recoverable

The event file notes that overpayments arising under the new collection mechanism are recoverable by HMRC. If an incorrect code is applied and too little tax is withheld, the shortfall may be recovered through a subsequent coding adjustment. Apply revised codes promptly and accurately to avoid cumulative underpayments for affected employees.