The Department for Work and Pensions (DWP) has confirmed a compensation scheme in March 2025 that will award up to £5,000 to around 57,000 Universal Credit claimants who lost out financially after transitioning from legacy benefits. The affected individuals were primarily receiving Severe Disability Premium (SDP) and other disability-related entitlements before being moved to Universal Credit.
This compensation follows a series of legal victories, including landmark rulings led by Leigh Day Solicitors, who represented clients that had suffered income losses due to the removal of essential support premiums.
What Led to the Compensation Scheme?
A High Court ruling in favor of claimants, brought by legal representatives on behalf of individuals TP and AR, found the removal of disability premiums during the benefit transition process to be unlawful and discriminatory.
- Loss of SDP and EDP (Enhanced Disability Premium) resulted in monthly losses of up to £180 per person.
- The compensation scheme is now being implemented to settle these losses and acknowledge the stress, hardship, and systemic failures endured by claimants.
Solicitor Ryan Bradshaw said, “Thousands of people lost income they relied on. While some were compensated through court cases, others who couldn’t pursue legal action have also suffered unnecessarily. A universal scheme was long overdue.”
Who Will Receive the £5,000 Compensation?
The DWP has categorized eligible claimants into three groups based on the timing and continuity of their Universal Credit claims.
| Group | Eligibility Criteria | Estimated Claimants |
|---|---|---|
| Group 1 | Individuals still receiving Universal Credit and due transitional SDP payments from 2020 onward | 35,000 |
| Group 2 | Individuals still on Universal Credit but due payments from 2018 to 2020 | 15,000 |
| Group 3 | Individuals no longer on Universal Credit but were impacted by the changes since 2018 | 7,000 |
The first wave of compensation payments is expected to begin by April 2025, starting with Group 1, as their data is already present in the digital system.
Compensation Amount and Settlement Details
The compensation values range from £200 to £5,000, depending on the length of time affected and the level of premium lost.
| Compensation Range | Who Qualifies |
|---|---|
| £200 – £1,000 | Individuals with partial loss and shorter eligibility periods |
| £1,000 – £3,000 | Claimants impacted for up to two years |
| £3,000 – £5,000 | Long-term claimants who lost full SDP/EDP support over multiple years |
The average loss due to discontinued disability premiums has been estimated at £180 per month, which significantly affected vulnerable individuals during the transition period.
How and When Will Payments Be Made?
The compensation scheme was officially confirmed in February 2025, and March-April 2025 marks the beginning of structured disbursements.
- Group 1 Payments: Begin automatically in late March to early April 2025
- Group 2 and Group 3 Payments: Expected later in April through June, due to manual checks required for mixed digital and clerical records
Payments will be made directly into claimants’ bank accounts, with no need to reapply if the DWP already has your updated details.
What Should Claimants Do Next?
If you believe you may qualify for the compensation, you should:
- Check if you were on legacy benefits with SDP or EDP before switching to Universal Credit
- Review any payment reductions between 2018 and 2020
- Contact Citizens Advice or another non-profit legal support service for guidance
- Ensure your bank details are current on your Universal Credit account
Solicitor Ryan Bradshaw continues to advocate for wider eligibility and urges the DWP to develop a formal, inclusive framework to identify and compensate all affected claimants—not just those who filed lawsuits.
FAQs
Who will receive the £5,000 DWP compensation?
Around 57,000 individuals who lost Severe Disability Premium or Enhanced Disability Premium while transitioning to Universal Credit may qualify.
Do I need to apply to receive this compensation?
No. If you’re part of the identified groups, the DWP will issue payments automatically—though you should verify that your contact and banking information is updated.
When will the compensation be paid out?
Payments for the first group are expected to begin in late March 2025, with others to follow in April and beyond.
How much will I receive?
Compensation amounts vary from £200 to £5,000, depending on how long and how severely you were affected.
How can I confirm if I’m eligible?
Contact Citizens Advice, check your historical Universal Credit and legacy benefit records, or wait for a letter from the DWP if you’re already flagged in their system.
What if I’m no longer receiving Universal Credit?
You may still qualify under Group 3 if your records show past eligibility. The DWP is working on manual processing for such cases.
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.
