In a significant step towards correcting past benefit payment injustices, the Department for Work and Pensions (DWP) has launched a compensation scheme that could see thousands of UK residents receive up to £5,000. This payout targets those who lost out financially during the government’s transition from legacy benefits to Universal Credit, particularly individuals who previously received Severe Disability Premiums (SDP) or Enhanced Disability Premiums (EDP).
The issue came into the spotlight after several court rulings, which found that the DWP failed to adequately protect disabled claimants during the shift. As of March 2025, the compensation process is moving forward, offering long-awaited relief to those impacted.
Who Is Eligible for the Compensation?
Eligibility hinges on having received certain disability-related benefits prior to switching to Universal Credit, and then suffering a loss of income during or after the transition.
| Category | Eligibility Requirement |
|---|---|
| Previous Benefit Status | Must have received legacy benefits with SDP or EDP before switching |
| Transition to Universal Credit | Transitioned between 2016 and 2020 |
| Loss in Monthly Income | Suffered financial loss due to missing premiums |
| Legal Settlement Group | Included in court proceedings or matching eligibility profiles |
While an estimated 275 individuals were initially compensated through a legal settlement, the wider scheme is expected to reach over 57,000 people.
Background: Why This Compensation Is Being Issued
The rollout of Universal Credit was intended to streamline the welfare system, but for thousands of disabled claimants, it resulted in a monthly shortfall of up to £180. Critics have long argued that the government failed to build in proper protections during the transition.
Legal challenges led by campaigners and law firms, including Leigh Day, pushed the DWP to reassess how it handled these cases. The courts ruled that transitional protection was insufficient, especially for vulnerable claimants losing disability-related payments.
Compensation Groups and Payment Structure
The DWP has divided claimants into three main groups for compensation processing:
| Group | Description | Estimated Claimants |
|---|---|---|
| Group A | Those still on Universal Credit and eligible for transitional SDP since 2020 | 35,000 |
| Group B | Those on Universal Credit during 2018–2020 with partial protection | 15,000 |
| Group C | Former Universal Credit claimants no longer receiving benefits | 7,000 |
Group A claimants will be prioritized in March and April 2025, as their data is already available in DWP’s digital systems, enabling faster disbursement.
How Much Will Claimants Receive?
Compensation amounts will vary depending on how long claimants went without disability premiums and the degree of financial impact. The DWP has confirmed payments ranging from £200 to £5,000.
| Duration of Loss | Estimated Compensation |
|---|---|
| Less than 6 months | £200 – £1,000 |
| 6 months to 2 years | £1,000 – £3,000 |
| Over 2 years or severe loss | £3,000 – £5,000 |
Payments are non-taxable and will not affect any current benefit entitlements.
What Should Affected Claimants Do Now?
Eligible individuals don’t need to apply immediately—those identified in DWP records will be contacted directly. However, if you believe you are eligible and haven’t received communication by mid-April 2025, you can:
- Contact Citizens Advice or a legal aid organization
- Review past benefit awards to check for SDP/EDP entitlements
- Monitor the DWP official website for updates
- Ensure your banking and contact details are up to date in your Universal Credit account
For those no longer on Universal Credit but who believe they qualify, manual review requests will be open later this spring.
A Step Toward Fairness
While this compensation plan brings overdue justice to many affected households, campaigners argue that it only begins to address the long-term impact of benefit reductions. Solicitor Ryan Bradshaw, who represented many of the original claimants, emphasized the importance of extending support to all those impacted—not just those who went through legal channels.
The DWP has acknowledged these concerns and committed to processing payments as quickly and fairly as possible, starting with those easiest to verify through existing systems.
FAQs
Who qualifies for the £5,000 compensation?
You may qualify if you lost Severe or Enhanced Disability Premiums after moving from legacy benefits to Universal Credit between 2016 and 2020.
Is an application required?
Not initially. The DWP is identifying eligible individuals automatically. If you don’t receive contact by April 2025, you may request a review.
When will payments begin?
The first batch of payments for Group A will begin by the end of March 2025, with others following in the coming months.
Will receiving this money affect my other benefits?
No. The compensation is non-taxable and does not count as income for benefit calculations.
How is the compensation calculated?
Amounts are based on how long you were underpaid and whether you lost one or both disability premiums.
Can former claimants receive compensation?
Yes, those no longer on Universal Credit can still qualify under Group C, but processing may take longer.
Who brought the legal case forward?
The law firm Leigh Day represented many claimants whose cases helped establish the legal foundation for this scheme.
Where can I get help with my case?
You can contact Citizens Advice, a legal assistance center, or a disability rights organization for personalized support.
Click 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.