Now, affected individuals could receive up to £5,000 in back payments as part of the Department for Work and Pensions (DWP) compensation scheme. But who is eligible, and how will the payments be processed? Here’s everything you need to know.

What Led to the Compensation Payout?

In 2018, many people who previously received income-based benefits (such as Employment and Support Allowance (ESA), Income Support, or Jobseeker’s Allowance) were moved to Universal Credit as part of the government’s welfare reforms. However, those receiving Severe Disability Premium (SDP) and Enhanced Disability Premium (EDP) were financially disadvantaged in the process.

Unlike the legacy benefits system, Universal Credit did not initially include equivalent payments for SDP and EDP, causing thousands of claimants to suffer significant income losses.

After a series of court rulings between 2018 and 2020, the government agreed that those impacted should be compensated. The DWP is now rolling out payments to rectify this error.

For more details on SDP and EDP, visit the official DWP benefits guide.

Who is Eligible for Compensation?

To qualify for the DWP compensation, claimants must meet the following criteria:

• Transitioned from legacy benefits to Universal Credit before January 2019 (when transitional protection was introduced).
• Previously received SDP and/or EDP under the legacy benefits system.
• Lost these premiums after moving to Universal Credit and experienced financial hardship as a result.
• Currently receiving Universal Credit with an SDP element or transitional amount or previously received Universal Credit under these conditions.

If you believe you meet these criteria but haven’t been contacted, check your eligibility using the UK Government’s benefits calculator or reach out to the DWP directly.

How Much Compensation Will You Receive?

The compensation amount varies depending on individual circumstances. While some claimants could receive up to £5,000, others may get lower payments depending on when they transitioned and how much they lost.

The DWP has categorized claimants into three groups, each with different payment timelines:

Group 1: Current Universal Credit Claimants (From 2020 Onward)

• Number of claimants: 35,000
• Details: These individuals have been receiving additional transitional SDP elements from 2020 onwards.
• Payment timeline: Most payments expected by August 2025.

Group 2: Past Universal Credit Claimants (2018–2020 Losses)

• Number of claimants: 15,000
• Details: These claimants lost SDP and EDP between 2018 and 2020 but are still receiving Universal Credit.
• Payment timeline: Compensation is expected to begin by March 2025.

Group 3: Former Universal Credit Claimants (No Longer Receiving UC)

• Number of claimants: 7,000
• Details: These individuals suffered financial losses from 2018 onwards but no longer receive Universal Credit.
• Payment timeline: The DWP is still developing a process to compensate this group.

For official payment guidance, visit Universal Credit Transitional Protection.

How to Claim Your Compensation

• The DWP will contact eligible claimants directly, so there’s no need to apply separately.
• If you believe you qualify but haven’t been contacted, ensure your contact details are up to date on your Universal Credit account or call the DWP helpline.
• Those no longer receiving Universal Credit should wait for further announcements on how to claim.

For contact details, visit the DWP customer service page.

Legal Background & Court Rulings

The fight for compensation began in 2018 when affected claimants took legal action against the DWP. Several court rulings found that the government had unfairly treated disabled individuals during the Universal Credit transition.

Key Legal Milestones:

• 2018: A High Court ruling found that two severely disabled men were unlawfully deprived of financial support when they moved to Universal Credit.
• 2019: The Court of Appeal upheld the ruling, reinforcing that Universal Credit caused “significant disadvantage” to disabled claimants.
• 2020: The government introduced transitional payments, but many claimants had already suffered financial loss.
• 2023-2024: The DWP finalized compensation plans to settle outstanding claims.

For official documentation, visit UK Courts & Tribunal Service.

Next Steps for Claimants

If you are eligible for compensation, here’s what you should do:

1. Wait for Contact from DWP: The government will notify eligible individuals automatically.
2. Check Your Universal Credit Account: Log in to Universal Credit online and ensure your contact details are updated.
3. Seek Advice if Necessary: If you are unsure about your eligibility, consult welfare organizations such as Citizens Advice.
4. Monitor Payment Updates: Follow official DWP announcements on gov.uk for the latest information.

Final Thoughts

The DWP compensation scheme is a long-awaited relief for thousands of disabled individuals who unfairly lost financial support during the transition to Universal Credit. While payments will take time to process, the government has committed to resolving all claims by August 2025.

If you or someone you know may be eligible, stay informed and ensure you receive the compensation you are owed. For the latest updates, regularly check the official DWP website.