Thousands of people in the UK who were moved to Universal Credit (UC) before 2019 could now be eligible for up to £5,000 in compensation. This announcement has come directly from the Department for Work and Pensions (DWP), as a response to growing criticism and legal pressure.
The core issue lies in how certain disability-related benefits were removed during the switch from older, legacy benefits to the Universal Credit system. Many people, especially the disabled and chronically ill, lost out on key financial support when they were forced to transition. This new compensation is a step towards fixing that mistake.
Why the Compensation Matters: A Long-Overdue Acknowledgment
When Universal Credit was introduced, the idea was to simplify the welfare system by combining six separate benefits into one monthly payment. However, during the early rollout, the system failed to protect some of the most vulnerable people.
Those who were receiving Severe Disability Premium (SDP) or Enhanced Disability Premium (EDP) saw these payments vanish when they moved to UC. These premiums were not minor extras—they were essential financial lifelines. Losing them meant a monthly shortfall of up to £180, or over £2,100 per year.
Over the years, this issue was taken up by disability rights groups, legal experts, and even reached courtrooms. After facing pressure, the DWP has finally launched a compensation plan to help those affected.
Who Can Claim Up to £5,000 in Compensation?
The compensation is not for all UC claimants. It is specially targeted at those who:
- Were receiving Income-based Employment and Support Allowance (ESA), Income Support, or Jobseeker’s Allowance (JSA) with:
- Severe Disability Premium (SDP)
- Enhanced Disability Premium (EDP)
- Disabled Child Premium
- Child Tax Credit with a disabled child element (except the severely disabled category)
- Moved to Universal Credit before January 2019, when no proper protections were in place.
If you fall under this category, you may qualify for the payment. The money is intended to make up for the loss and offer financial stability again.
Key Details of the Compensation Scheme
Here are some quick facts about the compensation plan:
| Key Point | Details |
|---|---|
| Eligible Individuals | Over 57,000 people |
| Compensation Amount | Up to £5,000 |
| Who Qualifies? | Early UC claimants who lost disability premiums |
| Payment Period | March to August 2025 |
| Source | Official DWP and gov.uk announcements |
How Will the Compensation Be Paid?
To ensure smooth payments, the DWP has created three main groups based on when and how people were affected:
Group 1: Active UC Claimants (Post-2020 Losses)
- About 35,000 people
- Still receiving Universal Credit
- Lost SDP elements after 2020
- Payments will be made by August 2025
Group 2: Active UC Claimants (2018–2020 Losses)
- Around 15,000 people
- Missed out on premiums between 2018 and 2020
- Still active on UC
- Payments started in March 2025, continuing through August
Group 3: Past Claimants (No Longer on UC)
- Estimated 7,000 individuals
- Affected between 2018–2023 but no longer receive UC
- Claims are under review, and some may require extra documentation
If you’re not sure where you fit, it’s important to check your benefit history and keep an eye out for letters or calls from the DWP.
Step-by-Step Guide: How to Claim Your UC Compensation
Worried about how to get the payment? Here’s a simple process to follow:
Step 1: Wait for DWP to Contact You
- The DWP is already contacting people it knows are eligible.
- There’s no general online application for this payment.
- If you haven’t heard anything but think you’re eligible, go to Step 3.
Step 2: Review Your Benefit History
- Look through old letters or online records for:
- Severe Disability Premium (SDP)
- Enhanced Disability Premium (EDP)
- Disabled Child Premium
- These terms confirm your previous eligibility.
Step 3: Contact the DWP Directly
- Call their helpline if you think you’re eligible:
- Phone: 0800 328 5644
- Textphone: 0800 328 1344
- Website: gov.uk/universal-credit
- Have your National Insurance number and benefit history ready.
Step 4: Gather Supporting Documents
- You may need to provide:
- Benefit letters
- Bank statements
- UC payment history
- Medical reports (if applicable)
Step 5: Wait for Payment
- Once approved, you’ll receive the payment directly to your bank account.
- Most payments won’t require interviews or additional steps.
Real-Life Example: Joan’s Story from Birmingham
Let’s understand this with a real example.
Joan, a 63-year-old woman from Birmingham, was on ESA with SDP in 2018. She was shifted to Universal Credit without warning, and her monthly income dropped by £195. She struggled to pay her rent and even buy food.
In March 2025, she received a letter from the DWP confirming she would get £4,800 in compensation. The payment allowed her to clear debts and finally feel financially secure.
Why Not Everyone Will Receive £5,000
Although the maximum payout is £5,000, not everyone will receive the full amount. The final sum depends on several factors:
- How long you were underpaid
- If you were receiving multiple premiums
- Whether you got any transitional protection
- Your current claimant status
If you missed out on premiums for 5 years, you might get the full amount. But if you lost support for a shorter time, the payment will be lower.
Will This Affect Other Benefits?
Good news! The DWP has made it clear: this compensation won’t affect your other benefits.
That means:
- Housing Benefit – No impact
- Council Tax Support – No impact
- Pension Credit – Safe
However, if you’re part of a local support scheme that is means-tested, it’s a good idea to report the payment to avoid confusion later. In most cases, it won’t reduce your other support.
Why This Decision Sets an Important Example
This compensation is more than just money—it’s a symbol of accountability. For years, campaigners and individuals fought against unfair treatment. This payment proves that speaking up works.
It’s also a sign that government agencies can be held responsible, especially when their policies cause real harm to vulnerable people.
What Should You Do Right Now?
Here’s a quick checklist:
- Check your past benefit letters or online records
- Wait for or respond to letters from the DWP
- Call the UC helpline if unsure
- Update your contact details with DWP if you’ve moved
- Don’t miss this chance—you could gain thousands