In a landmark move, the Department for Work and Pensions (DWP) has announced a compensation scheme for 57,000 benefit claimants who were financially impacted by the transition from legacy benefits to Universal Credit. For many, this marks a long-overdue acknowledgment of the hardship caused by the removal of the Severe Disability Premium (SDP) during the benefits overhaul.
This decision follows a legal ruling that found the DWP’s approach to transitioning disabled claimants into Universal Credit resulted in unjust financial losses. The compensation payouts—set to begin rolling out in March 2025 and conclude by August 2025—could amount to as much as £5,000 per claimant, depending on individual circumstances.
How the Problem Began
The rollout of Universal Credit was intended to simplify the UK’s welfare system by consolidating six legacy benefits into one payment. However, during this transition, many severely disabled claimants lost access to the Severe Disability Premium—a vital income boost meant to help cover additional living expenses.
These losses were not marginal. In some cases, individuals saw their monthly incomes drop by hundreds of pounds. The result was significant financial stress for thousands of already vulnerable individuals who had built their budgets around these payments.
Legal challenges quickly followed. Between 2018 and 2019, several claimants took the matter to court, arguing that they were unfairly disadvantaged by the new system. The High Court ruled in their favor, citing that the DWP had failed to protect disabled claimants during the transition.
Who Is Eligible for Compensation?
The DWP has clearly defined eligibility criteria for this scheme. To qualify for compensation, you must meet all of the following:
You were previously receiving legacy benefits (such as Income Support, ESA, or JSA) that included the Severe Disability Premium.
You transitioned to Universal Credit between 2018 and 2020 and, as a result, lost the SDP.
You are currently receiving Universal Credit or have received it at some point during that time frame.
No application is needed. The DWP will use existing records to identify eligible individuals and contact them directly. However, if you haven’t been contacted by mid-2025, it may be worth reaching out to confirm your case.
How Much Could You Receive?
The compensation amount depends on how long you were affected and which benefits you lost. While the DWP hasn’t released fixed amounts for each individual, estimates suggest the following:
-
Enhanced Disability Premium:
- £84/month (single)
- £120/month (couples)
-
Disability Premium:
- £172/month (single)
- £246/month (couples)
-
Disabled Child Premium:
- £177/month per eligible child
Over an extended period, this adds up significantly. For instance, someone losing £172/month for 18 months would be owed £3,096. A couple losing £120/month for 36 months might be entitled to £4,320. In the most prolonged and severe cases, payouts may reach or exceed £5,000.
When Will the Payments Be Made?
The DWP has divided affected individuals into three groups with corresponding payment timelines:
Current Universal Credit Recipients (Post-2020 Transition)
This group includes roughly 35,000 people. Payments are scheduled to be processed by August 2025.
Current Universal Credit Recipients (2018–2020 Transition)
An estimated 15,000 people fall into this category. They’ll start receiving payments from March 2025, with completion expected by August 2025.
Former Universal Credit Recipients
This group includes approximately 7,000 individuals who are no longer receiving Universal Credit. Their cases are still under review, and payouts may take longer.
If you belong to any of these categories but haven’t received any updates by mid-2025, it’s advisable to contact the DWP.
What to Do If You Haven’t Been Contacted
While the DWP intends to contact all eligible claimants automatically, there’s a chance some may be overlooked. Here’s what you should do:
- Review your benefits history to see if you were receiving SDP and when you moved to Universal Credit.
- Wait for official communication until at least June or July 2025.
- If no contact has been made, reach out to the DWP through the Universal Credit helpline or your local Jobcentre Plus.
- Seek support from organizations like Citizens Advice if you need help navigating the process or accessing records.
- Consider speaking with a benefits adviser or legal expert if you believe your case has been mishandled.
This is a rare instance where the DWP has acknowledged and acted on a significant error in benefit administration, and it’s crucial for those impacted to stay informed.
FAQs
Who qualifies for this DWP compensation?
Individuals who lost Severe Disability Premiums when switching to Universal Credit between 2018 and 2020 may be eligible, provided they were on legacy benefits and have either received or are receiving Universal Credit.
How much compensation will I get?
Amounts vary by case. Some may receive a few hundred pounds, while others—depending on the duration and severity of their loss—could receive up to £5,000.
Do I need to apply for this compensation?
No. The DWP will automatically identify and contact all eligible claimants based on existing benefit records.
What if I no longer receive Universal Credit?
You may still be eligible. The DWP is currently assessing former claimants, although these payments may take longer to process.
When will I get paid?
Payments will be distributed between March and August 2025, depending on your classification and when you transitioned to Universal Credit.
What if I haven’t heard anything by summer 2025?
Contact the DWP through their helpline or your Universal Credit portal. You can also visit your local Jobcentre for assistance.
Will this payment affect my current benefits or tax status?
No. This compensation is not expected to impact your other benefits or count as taxable income.
Where can I get more help?
You can consult Citizens Advice, a local benefits adviser, or organizations that specialize in disability rights and welfare claims.
Cick here to know more.
Aanchal is a passionate writer with a keen interest in storytelling, content creation, and creative expression. She enjoys exploring diverse topics and crafting engaging narratives that captivate readers.
