Plans to reinstate the Winter Fuel Payments have emerged following Sir Keir Starmer’s U-turn on the policy. Last year, Labour took away extra cash from some pensioners, envisioned to help them with their bills through the winter months, only to consider restarting the scheme this year. However, a new report has claimed the fuel payments may be offset through taxes claimed by HM Revenue & Customs.

According to The Times, the government plans to provide £300 Winter Fuel Payments to all state pensioners, with the scheme to be paid for by state pensioners. The news website claims that approximately half of those eligible for the payment who have an annual income exceeding £37,000 would end up repaying the amount through increased tax bills. Labour may also recover the payments from the estates of individuals who received the benefit but passed away before their tax obligations were paid.

For pensioners with an annual income above this threshold, despite the likelihood of receiving a payment this winter, this figure could be later reclaimed by HMRC the following year.

This may be claimed through a self-assessment for those who file a tax return, while other pensioners will have their tax code altered to reflect the change. This means some could pay an additional tax of approximately £17 to £25 each month next year.

Following Sir Keir’s suggestion of a U-turn in Parliament last month, Treasury staff are understood to be working on an announcement for the winter fuel payment as early as next week.

Chancellor Rachel Reeves said on Wednesday that her party has “listened to the concerns” of the people, ensuring that “pensioners will be paid for this coming winter”.

A Labour source told the Guardian: "We should never have scrapped the winter fuel allowance in the first place, but the whole process of reinstating it has been completely chaotic. The optics of us demanding the money back from grieving families are dire."

Unite general secretary Sharon Graham added: "Most people now recognise that the winter fuel cut was a massive mistake. Unite has been calling on the government to scrap the cut from day one and I was pleased when the PM finally acknowledged this.

"We are the sixth richest economy in the world, and we need to stop picking the pockets of pensioners and bring in a wealth tax."

The Express has contacted the HMRC for comment.