The government's U-turn could open up a major loophole (Image: GETTY)

       After facing significant criticism for reducing Winter Fuel Payments shortly after their election victory last year, the Labour party has reversed its decision and announced new rules making millions more pensioners eligible for the seasonal benefit this year. They have introduced new rules to means-test the seasonal benefit, ensuring that vulnerable retirees receive assistance during the coldest months.

       To qualify for the winter fuel payment, which provides either ￡200 or ￡300 each winter to assist with heating expenses, people over the state pension age must have a taxable income of less than ￡35,000 per annum. However, experts at Forbes Dawson cautioned: "Although this may seem like a sensible approach, as many pensioners are asset-rich but have relatively low levels of income this could have unintended consequences and exclude many 'poor' people.

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       "Wealthy pensioners are generally in a unique position to control their level of taxable income on a year-to-year basis. Most pensioners will generally have some control over the amount of taxable income they extract from their pensions on an annual basis and many pensioners will have no 'income' and live off their built-up capital."

       But, the experts added: "We are not seriously suggesting that wealthy individuals will manipulate their income just to enjoy a ￡200 benefit, there will be cases where the very wealthy still qualify, while more deserving cases go without."

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       To illustrate this, finance experts provided a hypothetical example of a retired NHS consultant named Dr Sam. He has an estate valued at ￡5 million and has already taken specific financial steps to reduce his future Inheritance Tax bill.

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       This includes lending money to his Family Investment Company, which is not part of his estate. Since he doesn't directly hold any of the shares, he doesn't pay tax on them. Instead, he receives ￡200,000 annually as repayment on his loan to the company.

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       Therefore, while his general income is in the six-figure range, his taxable income is zero, making him eligible under the new winter fuel payment rules.

       In another hypothetical scenario, the finance experts highlighted how people with fewer assets may have less control over. Doris, a retired teacher, relies on a taxable defined benefit public sector pension.

       She receives ￡40,000 per year from it, approximately ￡2,600 after tax. With little money elsewhere, she depends on nearly every penny and can't reduce her income.

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       Due to her taxable income, she won't qualify for the benefit, despite earning ￡160,000 less each year than Dr Sam.

       The new regulations will make an additional nine million pensioners eligible for Winter Fuel Payments. People can still choose not to receive it, but they must opt out before 15 September, 2025.

       Eligible people over the state pension age will be receiving ￡200 between November and December 2025. Meanwhile, those over the age of 80 who are eligible will receive ￡300.