Claimants of Universal Credit who were previously receiving Tax Credits have been cautioned about the risk of incurring a £100 fine if they no longer meet the requirements for free NHS prescriptions and dental care. This warning comes as the income threshold for eligibility under Universal Credit is lower than under the previous Tax Credits system.
Renowned financial expert Martin Lewis recently highlighted the potential unawareness among individuals regarding their changed eligibility status and the associated penalty risk if they incorrectly attempt to claim these benefits for free.
Following the conclusion of Tax Credits in April 2025, individuals were transitioned to Universal Credit, administered by the Department for Work and Pensions (DWP).
The income threshold for free prescriptions and dental care under Tax Credits was set at £15,276 annually before taxes and National Insurance contributions. In contrast, individuals on Universal Credit face a lower threshold, with figures of £435 per month or £935 per month if the claim includes specific components.
Martin Lewis emphasized the importance of understanding the differences between Tax Credits and Universal Credit, particularly regarding the lower income threshold for health benefits under the latter. He noted the shift from annual assessment under Tax Credits to monthly assessment under Universal Credit as a crucial factor that can lead to misunderstandings and potential fines.
Universal Credit is also replacing other benefits like Income-based Jobseeker’s Allowance, Income Support, Income-related Employment and Support Allowance, and Housing Benefit. Notably, some exceptions allow for the continuation of certain old benefits, such as Housing Benefit for individuals in supported or temporary housing.
A spokesperson from the Department of Health and Social Care affirmed that individuals on Universal Credit should still be entitled to health cost assistance if they meet the relevant earnings criteria. Nearly 90% of NHS prescription items and around half of NHS dental treatments are provided free of charge to patients.