Individuals on Universal Credit who transitioned from Tax Credits have received a caution about the potential risk of facing a £100 penalty if they are no longer eligible for free NHS prescriptions and dental care. The income threshold for qualification under Universal Credit is lower than that of Tax Credits, leading to this warning.
Renowned financial expert Martin Lewis has highlighted the likelihood of individuals unknowingly losing eligibility and facing fines for wrongly attempting to claim these benefits for free. Tax Credits were phased out in April 2025, with recipients transitioning to Universal Credit, managed by the Department for Work and Pensions (DWP).
The earnings threshold for free prescriptions and dental care under Tax Credits stands at £15,276 before deductions for tax and National Insurance. In contrast, individuals on Universal Credit have a lower threshold, set at £435 per month or £935 if the claim includes support for a child or limited capability for work element.
During a recent episode of his show on ITV, Martin Lewis emphasized the importance of understanding the differences in income thresholds between Tax Credits and Universal Credit to avoid potential penalties. The assessment frequency also plays a role, with Universal Credit being evaluated monthly compared to the annual assessment under Tax Credits.
Universal Credit is gradually replacing various benefits, including Income-based Jobseeker’s Allowance, Income Support, Income-related Employment and Support Allowance, and Housing Benefit. However, some exceptions exist, such as continued eligibility for Housing Benefit in certain circumstances, like supported or temporary accommodation.
The Department of Health and Social Care assured that individuals on Universal Credit remain entitled to health cost assistance if they meet the relevant earnings criteria. Notably, nearly 90% of NHS prescription items and about half of NHS dental services are provided free of charge to patients.
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