Thousands of Universal Credit claimants in the UK could soon receive compensation payments of up to £5,000 from the Department for Work and Pensions (DWP).
This initiative seeks to provide financial redress to those who lost disability-related premiums—like the Severe Disability Premium (SDP) or Enhanced Disability Premium (EDP)—during the transition from legacy benefits to Universal Credit (UC).
Here’s everything you need to know about this payout, including eligibility criteria, payment amounts, and what to expect next.
Why Is the DWP Offering a £5,000 Payout?
When Universal Credit was rolled out to replace legacy benefits like ESA, Income Support, and JSA, many claimants with disability-related premiums experienced sudden income drops.
These extra premiums were not fully included in UC, leaving tens of thousands financially worse off—some by over £200 per month.
Following legal challenges and court rulings that found DWP’s approach discriminatory, the department was ordered to compensate affected individuals.
Overview of the DWP Compensation Scheme
| Detail | Information |
|---|---|
| Compensation Amount | Up to £5,000 |
| Who Qualifies | UC claimants who lost SDP or EDP |
| Claim Process | Automatic – DWP will contact you |
| Timeframe | March to August 2025 |
| Number of People Affected | Over 57,000 across the UK |
Who Is Eligible for the £5,000 DWP Compensation?
To qualify for this one-off payment, you must meet all of the following conditions:
- You were receiving Severe Disability Premium or Enhanced Disability Premium under a legacy benefit.
- You moved to Universal Credit before January 16, 2019.
- You experienced a reduction in income after the switch.
- You did not receive any transitional protection.
If all of these apply to you, you do not need to apply—the DWP will contact you directly.
How Much Could You Receive?
The DWP will calculate your compensation based on the type of disability premium lost and how long you were underpaid.
| Premium Type | Estimated Monthly Loss |
|---|---|
| Enhanced (Single) | £84 |
| Enhanced (Couple) | £120 |
| Severe (Single) | £172 |
| Severe (Couple) | £246 |
| Disabled Child Premium | £177 per child |
Most payouts will range between £3,000 and £5,000, depending on the individual case.
Payment Timeline: When Will You Get It?
The DWP has divided claimants into groups based on when they transitioned to Universal Credit:
| Group | Payment Schedule |
|---|---|
| Moved after 2020 (35,000 claimants) | By August 2025 |
| Moved between 2018 and 2020 (15,000 claimants) | Payments started March 2025 |
| Former claimants (7,000) | Expected late 2025 |
Each eligible person will receive a letter from the DWP with details of their payment. No application is required.
How to Get Ready for the DWP Payment
Even though the process is automatic, you can take these steps to avoid delays:
- Keep old benefit statements for verification.
- Update your contact information with the DWP.
- Monitor your post regularly for official letters.
- Be cautious of scams—DWP will not ask for bank details by email or text.
- Seek advice from Citizens Advice or support services if you’re unsure.
The DWP’s £5,000 compensation payout is a major step toward correcting past financial harm to disabled claimants impacted by the Universal Credit transition.
With payments already rolling out and more expected through August 2025, now is the time to review your benefit history and stay alert for DWP communication.
If you meet the eligibility criteria, a significant financial boost could soon be on its way.
FAQs
Do I need to apply for the £5,000 compensation payment?
No. The DWP will automatically identify and contact eligible claimants based on their benefit history.
How will I know if I am getting paid?
You will receive a letter from the DWP outlining your eligibility and payment amount.
Can I appeal if I don’t receive a payment but believe I qualify?
Yes. You can contact the DWP directly or get support from Citizens Advice to initiate a formal review.