Universal Credit recipients who have transitioned from Tax Credits are being cautioned about the possibility of incurring a £100 penalty if they no longer meet the requirements for free NHS prescriptions and dental care. The income threshold for eligibility for these benefits is lower under Universal Credit compared to Tax Credits, leading to the risk of fines for those who incorrectly claim them for free.
Noted financial expert Martin Lewis has raised awareness about individuals who might be unaware of their changed eligibility status and the potential consequences of trying to claim these benefits erroneously. Tax Credits ceased in April 2025, with beneficiaries being shifted to Universal Credit, administered by the Department for Work and Pensions (DWP).
Under Tax Credits, the earnings limit for free prescriptions and dental care is £15,276 before taxes and National Insurance contributions. On the other hand, MoneySavingExpert.com highlights that individuals on Universal Credit face a lower threshold of £435 per month or £935 if their claim includes additional elements for children or limited capability for work, translating to approximately £5,220 or £11,220 annually.
During a recent broadcast of the Martin Lewis Money Show Live on ITV, Martin Lewis emphasized the importance of being informed about the differences in income thresholds between Tax Credits and Universal Credit. Failure to realize these distinctions has led to a surge in fines of up to £100 for individuals mistakenly claiming benefits they no longer qualify for.
In addition to replacing several other benefits, Universal Credit is also phasing out Income-based Jobseeker’s Allowance, Income Support, Income-related Employment and Support Allowance, and Housing Benefit. However, exceptions may apply, such as the continuation of Housing Benefit eligibility for those in supported or temporary housing situations.
A spokesperson from the Department of Health and Social Care reassured that individuals on Universal Credit who meet the income threshold criteria remain entitled to health cost assistance. They highlighted that nearly 90% of NHS prescription items and about half of NHS dental treatments are provided free of charge to patients.
