Universal Credit recipients who transitioned from Tax Credits are being cautioned about the risk of facing a £100 penalty if they no longer meet the criteria for free NHS prescriptions and dental care. This warning stems from the fact that the income threshold for eligibility is lower under Universal Credit compared to Tax Credits.
Financial expert Martin Lewis recently highlighted this issue, emphasizing that individuals may unknowingly attempt to claim free benefits they are no longer entitled to, potentially resulting in fines. Following the discontinuation of Tax Credits in April 2025, individuals were shifted to Universal Credit, which is administered by the Department for Work and Pensions (DWP).
Under Tax Credits, the earnings limit for free prescriptions and dental treatments stands at £15,276 before deductions. In contrast, for Universal Credit claimants, the income threshold is significantly lower at £435 per month, rising to £935 if the claim includes child-related benefits or limited capability for work components.
During a recent broadcast of the Martin Lewis Money Show Live on ITV, Lewis cautioned individuals moving from Tax Credits to Universal Credit to be aware of the differences in income thresholds for health benefits. He pointed out that many individuals mistakenly select the wrong benefit category when seeking free prescriptions or dental care, leading to potential fines of up to £100 due to lack of awareness.
Universal Credit is gradually replacing various other benefits such as Income-based Jobseeker’s Allowance, Income Support, Income-related Employment and Support Allowance, and Housing Benefit. While most benefits are transitioning to Universal Credit, there are exceptions where individuals may still be eligible for old benefits, like Housing Benefit for those in supported or temporary housing.
A spokesperson from the Department of Health and Social Care clarified that although Tax Credits and Universal Credit have distinct rules, individuals under Universal Credit should still qualify for health cost assistance if they meet the relevant earnings criteria. They highlighted that a majority of NHS prescription items and a significant portion of dental treatments are provided free of charge to patients.