The Department for Work and Pensions (DWP) has announced a new update regarding compensation payments for around 57,000 benefit claimants who were affected by the transition from legacy benefits to Universal Credit (UC).
- Payments could be as high as £5,000 per claimant
- The compensation aims to cover losses from the Severe Disability Premium (SDP) removal
- The DWP plans to complete all payments by August 2025
Let’s explore eligibility, payment rates, and timelines for these payments.
Why Are These Compensation Payments Being Made?
The High Court ruled in 2018 and 2019 that the DWP failed to protect claimant incomes when moving them from legacy benefits to Universal Credit.
- Claimants lost their Severe Disability Premiums (SDP) due to the transition
- The monthly loss of income was found to be around £180 per person
- In 2020, the DWP lost its appeal against these rulings
- Law firm Leigh Day estimates that compensation could exceed £5,000 per person
The payments will compensate for financial losses before February 2024, when new income protection rules were introduced.
Who Is Eligible for the Compensation?
To qualify for DWP compensation payments, claimants must meet both primary and secondary conditions.
Primary Condition
- Must have received or previously received Universal Credit (UC)
- UC must have included:
- An SDP element or a transitional amount
- Would have included it if not reduced over time
Secondary Conditions
Before moving to Universal Credit, claimants must have received an income-based legacy benefit that included one of the following:
- Enhanced Disability Premium
- Disability Premium
- Disabled Child Premium or Child Tax Credit with Disabled Child Element (non-severely disabled category)
How Much Compensation Will Claimants Receive?
The payments will cover each month between transitioning to UC and February 2024. The compensation rates are as follows:
| Claim Type | Monthly Compensation (£) |
|---|---|
| Enhanced Disability Premium (Single Claimant) | £84 |
| Enhanced Disability Premium (Couple Claim) | £120 |
| Disability Premium (Single Claimant) | £172 |
| Disability Premium (Couple Claim) | £246 |
| Disabled Child Element (Per Eligible Child) | £177 |
These payments will match the amount claimants would have received if new rules had been in place earlier.
When Will Claimants Receive Their Payments?
The timing of compensation payments depends on when the claimant moved to Universal Credit and whether they still receive it today.
Group 1: Easiest Cases (35,000 Claimants)
- People due additional SDP transitional payments from 2020 onwards
- Claimants still receiving Universal Credit
- Payments are automatic and processed via the digital system
- 4,000+ claimants have already been paid
- All 35,000 claimants will be paid by August 2025
Group 2: More Complex Cases (15,000 Claimants)
- People due compensation for the period between 2018 and 2020
- Claimants still receiving Universal Credit but previously received SDP manually
- Payments will begin by the end of March 2024
- Since manual SDP payments must be converted to UC, processing is slightly more complex
- All payments should be completed by August 2025
Group 3: Former Universal Credit Claimants (7,000 Claimants)
- People who previously received SDP payments but no longer claim Universal Credit
- No confirmed deadline for payments
- Due to complexity, DWP is still analyzing how to process these claims
DWP has stated:
“Analysis is ongoing to determine the level of work required to enable payments to be made to these claimants.”
FAQ’s
Who is eligible for the DWP compensation payment?
Claimants who moved from legacy benefits to Universal Credit and lost Severe Disability Premiums (SDP). They must have received an SDP element, a transitional amount, or would have received it if not reduced over time.
How much compensation will I receive?
Compensation amounts depend on previous benefit entitlements and range from £84 to £246 per month. Those with disabled children may receive £177 per child.
When will I receive my compensation?
- Most claimants will be paid by August 2025
- Some will receive payments by March 2024
- No deadline yet for former Universal Credit claimants
How will I receive my compensation?
Payments will be made directly into your bank account. The first group (35,000 people) will be paid automatically via the digital system.
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