Claimants of Universal Credit who transferred from Tax Credits are being cautioned about the risk of a £100 penalty if they no longer meet the requirements for free NHS prescriptions and dental care. The income threshold for eligibility is lower under Universal Credit compared to Tax Credits, leading to potential fines for those mistakenly attempting to claim the benefits.
Martin Lewis recently highlighted the issue, emphasizing that individuals may not realize they are no longer eligible for free prescriptions and dental treatment under Universal Credit. Following the discontinuation of Tax Credits in April 2025, individuals were transitioned to Universal Credit, administered by the Department for Work and Pensions (DWP).
The earnings limit for free prescriptions and dental care under Tax Credits stands at £15,276 annually before tax and National Insurance, whereas under Universal Credit, it is significantly lower at £435 per month or £935 per month for specific claim components. This discrepancy has led to confusion among some claimants, resulting in potential fines for incorrect claims.
Universal Credit also replaces other benefits such as Income-based Jobseeker’s Allowance, Income Support, Income-related Employment and Support Allowance, and Housing Benefit. While some exceptions exist, such as continued eligibility for Housing Benefit in certain circumstances, understanding the differences between Tax Credits and Universal Credit is crucial to avoid penalties.
The Department of Health and Social Care assures that individuals on Universal Credit remain entitled to health cost assistance if they meet the applicable earnings criteria. Nearly 90% of NHS prescription items and half of NHS dental treatments are provided free of charge to patients, ensuring access to necessary healthcare services.