Thousands of Universal Credit claimants across the UK are set to receive compensation payments of up to £5,000, following a Department for Work and Pensions (DWP) announcement aimed at addressing past financial losses suffered during the transition from legacy benefits.
The compensation plan comes after multiple legal rulings found that the Severe Disability Premium (SDP) was unfairly removed for some claimants who moved to Universal Credit (UC), leading to financial hardship. Now, the DWP has confirmed payments will be made to approximately 57,000 claimants affected by these errors.
Why Is DWP Paying Compensation?
Between 2018 and 2019, two High Court rulings determined that the DWP failed to adequately protect claimants from financial losses when transitioning from older benefits to Universal Credit. The rulings highlighted that many severely disabled individuals who previously received SDP lost significant income after switching to UC.
The Severe Disability Premium (SDP) was an additional financial support for disabled people who did not have a carer. When affected individuals moved to UC, the premium was not included, leading to monthly income reductions of up to £180. Following a failed appeal by the government in 2020, the DWP was ordered to provide financial redress, leading to the current compensation scheme.
Who Is Eligible for the Compensation?
To qualify for the DWP’s £5,000 compensation, claimants must meet specific eligibility criteria:
Primary Eligibility
The claimant must currently receive or have received Universal Credit with an SDP element, a transitional amount, or should have been eligible if not eroded over time.
Secondary Conditions
Before transitioning to UC, the claimant must have been entitled to an income-based legacy benefit that included:
- Enhanced Disability Premium
- Disability Premium
- Disabled Child Premium
- Child Tax Credit that included the Disabled Child Element (non-severely disabled category)
How Much Compensation Will You Get?
The compensation amount depends on how long a claimant went without the Severe Disability Premium before February 2024, when new income protection rules were implemented. The estimated payment breakdown includes:
🔹 Enhanced Disability Premium:
- Single claimant: £84 per month
- Couple: £120 per month
🔹 Disability Premium:
- Single claimant: £172 per month
- Couple: £246 per month
🔹 Disabled Child Element:
- £177 per eligible child per month
Claimants could receive back payments of up to £5,000, depending on the duration of their affected period.
When Will Compensation Be Paid?
The DWP has categorized eligible claimants into three groups, with payments scheduled accordingly:
Group 1:
35,000 claimants who are currently receiving Universal Credit and were impacted after 2020.
Payments expected by August 2025.
Group 2:
15,000 claimants who transitioned between 2018 and 2020 and are still on UC.
Payments expected by March 2025 and completed by August 2025.
Group 3:
7,000 former claimants who previously received UC but whose claims have since closed.
DWP is still determining a timeline for this group.
How to Claim Compensation
Eligible claimants do not need to apply—the DWP will contact them directly if they qualify. However, claimants should:
- Ensure their contact details are up to date with the DWP.
- If they believe they qualify but haven’t been contacted, they can reach out to Universal Credit Helpline.
- Keep an eye on official government websites for updates.
For further details, visit the official DWP website: www.gov.uk/universal-credit
What Should Claimants Do Now?
Claimants should remain vigilant by:
- Checking their eligibility based on the provided criteria.
- Ensuring their DWP records are up to date to receive timely notifications.
- Following government updates on compensation payment schedules.
For consumer protection and legal assistance, you can visit:
- Citizens Advice Bureau (www.citizensadvice.org.uk)
- Turn2Us UK (a financial support charity): www.turn2us.org.uk
Conclusion
The DWP’s compensation scheme represents a significant financial relief effort for thousands of Universal Credit claimants who experienced income losses due to Severe Disability Premium (SDP) exclusions. With potential payments of up to £5,000, eligible individuals should ensure they are informed and prepared for upcoming payments.
As the DWP rolls out these payments, claimants are encouraged to monitor their UC accounts, stay updated with official announcements, and seek guidance from financial assistance organizations if needed.
This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.
