Universal Credit recipients who transitioned from Tax Credits have been cautioned about the risk of incurring a £100 penalty if they no longer meet the eligibility criteria for free NHS prescriptions and dental care. The income threshold for qualifying for these benefits is lower under Universal Credit compared to Tax Credits, leading to potential penalties for those who mistakenly attempt to claim them for free.
The shift from Tax Credits to Universal Credit, handled by the Department for Work and Pensions (DWP), took place in April 2025. Notably, individuals must be aware of the differences in the income limits for free prescriptions and dental care under the two benefit systems. While Tax Credits had an earnings limit of £15,276 annually before tax and National Insurance, Universal Credit sets the threshold at £435 per month or £935 if the claim includes elements for children or limited capability for work.
Financial expert Martin Lewis recently highlighted the importance of understanding these changes during his broadcast on ITV. He emphasized that individuals moving from Tax Credits to Universal Credit should not assume automatic eligibility for free health services, as the income criteria differ between the two systems. Failure to verify eligibility could result in fines up to £100, a consequence that many are unaware of.
Universal Credit is also replacing other benefits like Income-based Jobseeker’s Allowance, Income Support, Employment and Support Allowance, and Housing Benefit. While most benefits transition to Universal Credit, there are exceptions, such as continued eligibility for Housing Benefit in supported or temporary accommodations.
According to the Department of Health and Social Care, individuals on Universal Credit should still be entitled to health cost assistance if they meet the relevant earnings thresholds. Nearly 90% of NHS prescription items and half of dental treatments are currently provided free of charge to patients.