Successful Legacy Appeals Compensation Scheme

On 14th May 2026 the Minister of State announced a new compensation scheme – The Successful Legacy Appeals Compensation Scheme.

If you were previously on:

Income-Related Employment and Support Allowance, or
Income Support, or
Income-Based Jobseekers Allowance, or
Housing Benefit, or
Child Tax Credit, or
Working Tax Credit

And

you claimed UC because an award of one the above benefits was terminated incorrectly, and
you claimed UC within a month of that benefit ending, and
challenged the termination decision and won, and
were worse off on UC.

Then you may be entitled to a one off lump sum payment from this Scheme.

This is because, even though that legacy benefit had been stopped in error, and you challenged that decision and worn, the UC rules did not allow you to return to your previous legacy benefits (sometimes called the ‘lobster pot’ effect). So, you were stuck on UC receiving less income even though it had been accepted that your legacy benefit was ended incorrectly.

NOTE: This Scheme does not cover those who were misadvised to claim UC.

Example:
Sasha was getting Income Support, Child Tax Credit and Housing Benefit when her youngest child turned 5 in 2023. The DWP stopped her Income Support and so she claimed Universal Credit. However, she was the full time carer of her disabled daughter and so should have been able to stay on Income Support and her other legacy benefits.
Although she was worse off on UC, she was stuck on it – she was not allowed back onto the legacy benefit system even though she’d challenged the closure of her Income Support and won that challenge.
As long as Sasha made her claim for UC within a month of her Income Support initially ending, and there was no change in her circumstances at that time that would have triggered the claim for UC anyway, then Sacha may be entitled to a payment from this scheme.

Important! The DWP will not be seeking out claimants who could be entitled to this payment, so if you think you might be contact a benefits Adviser to chat through the scheme and help you claim if applicable.

Entitlement Rules

The gov.uk website says that someone may be eligible for compensation from this scheme if all the following apply:

they have proof that they were receiving one or more means-tested legacy benefits, including Housing Benefit, Child Tax Credit, Working Tax Credit, Income-Related Employment and Support Allowance, Income-Based Jobseeker’s Allowance, or Income Support, and
a decision was made to end one of these legacy benefits, and
because of that decision, they successfully claimed Universal Credit within one month of the legacy benefit ending, and
the amount of Universal Credit they were entitled to was less than what they had been entitled to in their legacy benefit before the move (see below for examples), and
they challenged the decision that stopped the legacy benefit and won (see below for examples).

Important! If you’re not sure if this applies to you, or you don’t have proof that you were receiving when of those benefits, then speak to a Benefits Adviser who can help work out if you could be entitled and help you make a claim.

Claimants who cannot benefit from this scheme include:

those who claimed UC purely due to poor advice (as the reason for the UC claim must be that their legacy benefit ended)
those who had a Severe Disability Premium included in a legacy benefit award in the month before their UC claim (as they should have already received compensation for the loss in benefit income when moving onto UC)
those who had a change in circumstances between their legacy benefit ending and claiming UC, that would have triggered a claim for UC anyway
those who waited for over a month after their legacy benefit was ended to make their claim for UC.

Reasons why your legacy benefit ended

Below we have listed some common reasons why a legacy benefit may have been terminated in error. This list in not exhaustive and there will be many other situations.

The key to being entitled to compensation under this scheme is that your legacy benefit was terminated so you had no option but to claim UC, and were unable to get back onto your legacy benefit even though you successfully challenged the termination decision, and were worse off as a result.

REMEMBER: To be entitled to a payment under the Scheme you must have made a successful claim for UC within a calendar month of your legacy benefit being terminated.

All legacy benefits –

Ended because the claimant had savings over £16,000 but the claimant successfully challenged as some should have been disregarded.
Ended because the claimant became a student but the claimant successfully challenged as they fell into a category of student who could claim.
Where DWP / HB Office decided to terminate an award where a closed period supersession would have been appropriate, and the decision to terminate was overturned via MR / Review or Appeal.

Housing Benefit

Ended when the older member of a couple became State Pension age but the couple successfully challenged as they should have remained entitled (because the younger member remained entitled to IR-ESA, IS or IB-JSA).
Ended because the HB office believed the claimant did not meet the temporary absence rules but the claimant successfully challenged this.
Ended because they moved home even though this was within the LA area and they successfully challenged this (note – this was a common problem in the early days of UC).
Ended because the claimant’s partner moved out and it was their name on the tenancy agreement and they successfully challenged this as they should have been treated as liable for the rent.
Ended because a high non-dependant deduction was being taken (which reduced entitlement to £nil) but they successfully challenged this and were entitled to some HB when the correct rate of non-dep deduction was taken.

Income Support

Ended because a change in circumstances – eg. child turning five, caring responsibilities ending – meant they no longer met one of the categories of claimant that could get IS, but they successfully challenged because they fell into another category.

Income-Related ESA

Ended because the claimant was treated as fit for work for failing to do something without good reason but they successfully challenged this.
Ended because the claimant was found fit for work before 24th July 2020^ and they successfully challenged this.

^If this decision was made on or after 24th July 2020, then the claimant could have continued to receive IR-ESA if they appealed the decision (no need to have a MR first). So whilst these claimants should still make an application to the Scheme if they fit the eligibility rules, the DWP might reject their application because they could have remained on the legacy benefit system and UC was not their only option.

Child Tax Credit

Ended because HMRC incorrectly believed they were no longer responsible for the child.

Working Tax Credit

HMRC reviewed whether a self-employed claimant was ‘gainfully self-employed and so terminated their Working Tax Credit entitlement. But claimant challenged and WTC was reinstated.

How Much?

Claimants found entitled to compensation will receive a one-off lump sum payment. The gov.uk website says that “the lump sum is worked out by taking the biggest monthly loss and multiplying it by 12”.

It is unclear how this will be worked out, but it would make sense that it will look at the amount of legacy benefits the claimant would have received if their legacy benefit had not been terminated, and compare this to the amount of UC awarded.

Example:
Sasha from the example above, was getting Income Support, Child Tax Credit and Housing Benefit when her youngest child turned 5 in 2023.
After claiming Universal Credit she was £180 a month worse off.
If Sasha meets all the eligibility rules for this compensation scheme, and makes a successful claim, then she will receive a one off lump sum payment of £2,160.

How to apply

In England Scotland and Wales:

If you think you could be entitled, you should make a claim. You can either complete the claim form – click here, or write a letter that answers all the questions on the form and send it – marked for the attention of the Successful Legacy Appeals Team – to:
Freepost, Lowestoft Jobcentre, Post Handling Site B, Wolverhampton, WV99 1NH
RTGC-GJXX-GSKR

If you will struggle to complete the form you can apply over the phone by calling:
Telephone: 0800 158 5557
Welsh language: 0800 328 1744
Relay UK (if they cannot hear or speak on the phone): 18001 then 0800 328 5644

In Northern Ireland

If you think you could be entitled you need to make a claim by 6th June 2028.
You can either phone the UC Service Centre: 0800 012 133, or speak to a member of staff at their local Jobs and Benefits Office.
The NI gov.uk website has an eligibility checker but note the top tip below.

Important! The claim form asks if you appealed the closure of your legacy benefit – this includes you telephoning the DWP/HMRC, or writing to them – it does not have to have been a formal appeal request. As long as following that contact the decision to end your legacy benefit was over turned.

What next?

The DWP will decide whether you should receive a payment under the scheme and may contact you for more information.

The DWP will send a decision about your application within six weeks of receiving it.