The DWP is offering up to £5,000 in compensation to thousands who were affected by a Universal Credit change. The department hopes to complete the DWP Universal Credit Compensation distribution process by August 2025.
Individuals just need to satisfy the eligibility requirements because there is no need to submit any application form. The DWP will automatically contact the qualifying claimants.
DWP Universal Credit Compensation
In the United Kingdom, the Department for Work and Pensions (DWP) has confirmed that around 57,000 benefit claimants are going to receive compensation payments, which could be worth a maximum of £5,000 each.
This decision follows a legal ruling that found out that thousands of disabled claimants lost Severe Disability Premiums because of the transition from legacy benefits to Universal Credit prior to the introduction of appropriate transitional protections.
What is the reason behind DWP Universal Credit Compensation?
The DWP introduced Universal Credit (UC) to replace legacy benefits such as Income Support, Jobseeker’s Allowance (JSA), and Employment and Support Allowance (ESA). Universal Credit not only simplified the welfare system, but also removed certain disability premiums that were offered under the legacy benefits.
The most affected beneficiaries were severely disabled individuals who previously received the Severe Disability Premium (SDP). Most of them lost hundreds of pounds monthly, leading to financial hardships.
The Universal Credit Compensation scheme follows two High Court rulings between 2018 and 2019. The High Court ruled in favor of the suffering beneficiaries, stating that they should not have faced financial losses while moving to the new system.
The government was also forced to introduce transitional payments, but many people were still excluded. Now, the DWP Universal Credit Compensation is designed to correct those mistakes.
Who is eligible for DWP Universal Credit Compensation?
The DWP disclosed that the DWP Universal Credit Compensation will be provided to those claimants who lost severe disability premiums (SDP) while their move to Universal Credit.
In February 2025, Neil Couling, DWP’s senior responsible owner of Universal Credit, stated that interested individuals must be receiving or have received Universal Credit that includes an SDP element as well as a transitional amount. They also need to satisfy one of three conditions before moving to Universal Credit.
The first condition is having been eligible for an income-based legacy benefit that contained an Enhanced Disability Premium. The second condition is claimants having been eligible for an income-based legacy benefit that involved the Disability Premium.
The third and the last condition is having been qualified for an income-based legacy benefit with the Disabled Child Premium and Child Tax Credit with the Disabled Child Element (non-severely disabled group).
What will you get from DWP Universal Credit Compensation?
The exact compensation amount depends on how much an eligible individual lost and how long they were affected. The monthly compensation amounts are
Enhanced Disability Premium:
- For singles: £84 monthly
- For couples: £120 monthly
Disability Premium:
- For singles: £172 monthly
- For couples: £246 monthly
Disabled Child Premium:
- For each qualifying child: £177 monthly
The DWP has also announced that thousands of eligible claimants can receive a maximum of £5,000, depending on how long they were affected.
How is DWP Universal Credit Compensation being distributed?
The distribution of DWP Universal Credit Compensation depends on when the claimants moved to Universal Credit, and whether they still do today. Neil Couling defined three distinct groups with different payment distribution deadlines.
- The first group includes those who have had extra transitional SDP elements from 2020 onwards and who continue to get Universal Credit.
- The second group includes individuals who received an additional amount between 2018 and 2020, and who are still receiving universal credit.
- The third group includes those due additional payments from 2018 onwards and who are not receiving Universal Credit
When will you get DWP Universal Credit Compensation?
Each disclosed group faces different processing timelines because of the varying complexities in their cases. The first group contains around 35,000 individuals who can expect to receive their DWP Universal Credit Compensation by August 2025.
More than 4,000 of these beneficiaries have already received their compensation amount. Couling outlined this group as the easiest to process because payments can be made automatically by utilizing the digital system.
The second group consists of 15,000 individuals who will be able to receive their compensation payments by the end of March 2025. Mr. Couling said that these cases are slightly more complex because they include converting from a manual SDP payment to being paid by the Universal Credit system.
Besides this, the DWP still expects to distribute all payments to this group by August 2025. However, there is no deadline announced for the third group that contains more than 7,000 beneficiaries.