DWP confirm what counts as 'taxable income' as winter fuel payment rule announced after U-turn - full list

Millions of people in the UK will have their £300 payment restored this winter

The Department for Work and Pensions (DWP) has disclosed what it considers to be 'taxable income', just hours after Rachel Reeves announced a U-turn on eligibility for the winter fuel payment.

On Monday morning, the Chancellor of the Exchequer revealed that the qualifying criteria for the benefit will be expanded so that up to nine million pensioners could have their payment, worth up to £300, restored this year.

The decision to means-test the previously universal payment was one of the first announcements made by the Chancellor after Labour’s landslide election victory last year, and it has been widely blamed for the party’s collapse in support.

Confirming the U-turn on the stance, Rachel Reeves said the Government had "listened to people’s concerns" about the decision to limit the payment to the poorest pensioners last winter.

She added that her department is now able to widen eligibility because Labour had restored "stability" to the economy.

Anyone with an income of under £35,000 a year will now get the payment automatically.

Pensioners with an income above this threshold will also receive the payment - but it will then be reclaimed from them in tax.

Now, the government has outlined what qualifies as taxable gross income.

This includes:

• Earnings

• Retirement pension

• Jobseeker’s Allowance

• Widow’s benefit

• Occupational pension

• Personal and annuity pension

• Taxable interest

• Rental property income

• Carers Allowance

• Statutory sick

• Paternity, maternity and adoption pay

• Employment and Support Allowance

• Incapacity Benefit

Some two million pensioners who earn more than £35,000 will see their winter fuel payments clawed back via the taxman, the Treasury estimates.

"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," says the Treasury announcement.

"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."

Writing on social media site X, Paul Johnson of the Institute for Fiscal Studies responded by saying: "The corollary of ‘this will not lead to permanent additional borrowing’ is that it will lead to permanent additional taxes (or just possibly permanent cuts to other bits of welfare)."