Universal Credit recipients transitioning 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 earnings threshold for qualifying for these benefits is lower under Universal Credit compared to Tax Credits.
Financial expert Martin Lewis recently highlighted the potential pitfalls, emphasizing that individuals may not realize they are no longer entitled to these benefits and could unknowingly face fines for incorrect claims. Tax Credits were phased out in April 2025, with individuals being transferred to Universal Credit, administered by the Department for Work and Pensions (DWP).
The threshold for free prescriptions and dental care under Tax Credits stood at £15,276 per year, while under Universal Credit, it is significantly lower at £435 per month, or £935 per month if certain components are included in the claim. The difference in assessment periods between the two benefit systems can also impact eligibility.
The shift to Universal Credit also affects other benefits like Income-based Jobseeker’s Allowance, Income Support, Income-related Employment and Support Allowance, and Housing Benefit. However, in specific circumstances, individuals may still be able to receive certain old benefits, such as Housing Benefit for those in supported or temporary housing.
According to a Department of Health and Social Care spokesperson, while Tax Credits and Universal Credit have distinct rules, individuals under Universal Credit should still be eligible for health cost assistance if they meet the earnings criteria. Nearly 90% of NHS prescription items and about half of NHS dental treatments are currently provided free of charge to patients.