Universal Credit recipients who previously received Tax Credits have been cautioned about the risk of incurring 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 on Universal Credit is lower compared to Tax Credits. Financial expert Martin Lewis recently highlighted this issue, emphasizing the potential fine for incorrect claims.
Following the discontinuation of Tax Credits in April 2025, individuals transitioned to Universal Credit administered by the Department for Work and Pensions (DWP). The income threshold for free prescriptions and dental treatment under Tax Credits was set at £15,276 annually before deductions, whereas under Universal Credit, it amounts to £935 monthly with specific components included.
Martin Lewis reiterated the importance of understanding the differences in income thresholds between Tax Credits and Universal Credit, particularly in the context of health cost entitlements. Failure to accurately declare eligibility may lead to fines of up to £100, a consequence that many individuals are unaware of due to the revised criteria under Universal Credit.
Moreover, the transition to Universal Credit also impacts other benefits like Income-based Jobseeker’s Allowance, Income Support, Employment and Support Allowance, and Housing Benefit. While most individuals on Universal Credit should still qualify for health cost assistance, it is essential to meet the relevant earnings threshold criteria.
The Department of Health and Social Care confirmed that most NHS prescription items and a significant portion of dental treatments are provided free of charge to patients, with almost 90% of prescription items covered. It is crucial for individuals moving from Tax Credits to Universal Credit to stay informed about the changes to avoid potential penalties and ensure continued access to essential healthcare benefits.