Martin Lewis announces huge winter fuel payment update | Personal Finance | Finance

Money expert Martin Lewis has given his verdict on the new winter fuel payment system announced by the government today. The Money Saving Expert founder put out a video giving his instant reaction to the changes announced by Chancellor Rachel Reeves on Monday which will mean the vast majority of pensioners will now receive a £200 to £300 winter fuel payment this winter after all.

The money maestro set out how it will work, and who will get the new winter fuel payment, including the tax system to take back the money for those earning over the new £35,000 eligibility threshold.

Martin Lewis said: “The way it will work is, even though the payment is a household payment, the tax clawback is an individual tax clawback. So let’s give you an example.

“You’ve got a household that’s due to get £300 with two state pensioners in. That £300 for the clawback is treated as £150 and £150, so, if this person earns over £35,000 they lose it, if this person earns under £35,000 they keep it.

“They still get £150. If both of them earns over £35,000 they both lose it, and if both of them earn under £35,000, they both keep it.

“Now that is a good system compared to what we thought was going to happen, that it would be something akin to the Child Benefit Higher Income tax charge, where the whole benefit depends on the highest earner’s income. And in fact now we know this system can be done, there’s an argument too for lobbying for that change to be made for Child Benefit too.

“But let’s keep this on Pension Credit. Do I think this is an improvement? Spoiler: yes, very much so.

“The two big things I have been campaigning on, the way the means testing was done, first of all, the threshold set last winter at £11,600, a single pensioner earning under £11,600, was just far too low and left many people still on very low incomes just above the threshold missing out.

“Moving it to £35,000 where it’s much more equivalent to average income is a big improvement and should lead to three in four state pensioners getting the payment according to the government numbers.

“The second one and the one I’ve been most verbal on is that the method of means testing put into place was based on Pension Credit which has long been a critically underclaimed benefit, so linking winter fuel payments to Pension Credit was in my view flawed, and even now there are 700,000 eligible state pensioners on very low incomes who should be getting Pension Credit who don’t. Well that’s gone, from now every state pensioner household will get this by default unless they choose to opt out of it.

“Which means those vulnerable households who were least likely to act will automatically get it. So for that I’m very grateful to the Chancellor for listening to me and the many other people who have been campaigning on this.

“This is a very big improvement on what we had, and it does mean, there is still a means testing in place, and many people have said they don’t want millionaires and billionaires to get the winter fuel payment, well they won’t get the winter fuel payment, they can either opt out or have it clawed back in the tax system. But it does mean far more pensioners who were struggling with still–high energy bills will get this payment. I feel relieved, relieved that there’s an improvement.”