Research and analysis

Summary: Move to Universal Credit non-claimants (formerly tax credits customers) research

Published 17 December 2024

This report was written by researchers at Ipsos UK Public Affairs:  

Daniel McGrady, Associate Director 

Jamie Roberts, Research Manager 

Chloe Snook, Research Executive 

Background

Universal Credit (UC) is a means-tested benefit that was introduced in the UK to replace 6 ‘legacy’ benefits, including Working Tax Credit (WTC) and Child Tax Credit (CTC). In 2023, the Department for Work and Pensions (DWP) issued Migration Notices to tax credits customers at increasing scale, informing them to apply for Universal Credit to continue receiving financial assistance. Early learning around the managed migration of tax credits customers, published by DWP, set out the reasons why some individuals were not making a claim for UC by the deadline in their Migration Notice. This research explores the reasons for not making a claim at a larger scale.

Research Objectives

DWP commissioned Ipsos UK to conduct research into the reasons why Working Tax Credit and Child Tax Credit customers were not claiming UC. A survey and follow-up interviews were carried out to uncover respondents’ awareness and understanding of UC, and reasons for not applying. It also examined the financial and broader impacts of not claiming UC, potential long-term consequences, and future intentions regarding UC.

Methodology

The sample frame was provided by DWP and consisted of Working Tax Credit and Child Tax Credit customers who had not applied for UC after the deadline in their Migration Notice. The sample consisted of a combination of Working Tax Credit-only, Child Tax Credit-only, or a combination of both, customers. The research employed a mixed-methods design. Quantitative data collection took place from April to June 2024 via online and CATI surveys with 1,029 respondents (923 who had not made a claim and 106 who had made a claim to UC since the DWP sample was drawn). The survey data was weighted to adjust for non-response bias. Qualitative semi-structured interviews were conducted from July to August 2024 with 30 survey respondents who had provided permission to be recontacted. The quantitative data was analysed to identify subgroup differences between key demographic groups. Subgroup differences between survey questions related to knowledge, awareness, attitudes and behaviours towards UC are reported where they are supported by qualitative evidence and provide useful insights into the relationships between these factors. The qualitative data was analysed to identify key themes and explain the survey statistics where possible.

Key findings

Awareness and understanding of UC

Overall, 78% of survey respondents reported knowing a little bit or a lot about UC. There was more limited understanding of specific features and rules of UC such as the rules around working and capital. Around 7 in ten (69%) were unaware that they might have been able to receive transitional protection and were not aware that they could have applied for advance payments (70%). Furthermore, around half of survey respondents with children at pre-school age (47%) and primary school age (46%), and 6 in ten respondents with children at secondary age (61%) did not know it was true that you can claim 85% of childcare costs back through UC. The qualitative interviews revealed that greater knowledge about transitional protection and advance payments would not have been a factor in their decision about whether to claim UC. However, interview participants with younger children did report that knowing more about the support with childcare costs may have influenced their decision.

Survey respondents predominantly used the GOV.UK website (37%), online benefit calculators (28%), and the Move to Universal Credit helpline (10%) to make a decision about claiming UC. Interview participants described how these resources could lead to confusion, perceptions of ineligibility and/or reinforce existing perceptions about UC.

Reasons for not claiming UC

Survey respondents were asked whether any reasons stopped them from making a claim to UC^{[footnote 1]}. Respondents were asked about reasons that related to their personal circumstances and separately asked about reasons that related to UC migration and the claims processes. Whilst survey respondents generally selected reasons from both question categories, the interviews revealed that participants in particular circumstances placed more importance on reasons from one category as their primary reason for not claiming UC.

Reasons related to personal circumstances and eligibility: Over 3 in 4 (76%) survey respondents selected at least one reason for not claiming UC related to their personal circumstances^{[footnote 2]}. Nearly three in ten (28%) respondents selected not knowing whether they would be eligible to claim UC as a reason for not making a claim. Over one in 4 (26%) reported earning too much, and one in 5 (20%) reported having too much in savings and/or their work circumstances being about to change. Interview participants who emphasised reasons related to their personal circumstances tended to be employed, have savings, and often self-assessed as not eligible for UC and this was the primary reason for not making a claim. These participants assumed that they were ineligible for UC as they believed that they exceeded the income and/or capital thresholds, usually without verifying this against external information sources or by making a claim.

Reasons related to UC migration and claim processes: Almost 6 in ten (57%) respondents selected at least one reason for not claiming UC relating to UC migration and the claims process. These included the perception that the claim process is too much effort (30%), frustration over needing to move to UC (27%), and not wanting to visit the Jobcentre Plus (25%). Interview participants who emphasised these reasons sometimes faced circumstances that made claiming UC more challenging including having health conditions and not speaking English as a first language. These participants described issues with the online system and gathering the necessary documentation required for the online application form, as well as logistical challenges such as lack of time and digital access.

Survey respondents who were self-employed and those with caring responsibilities were identified as disproportionately impacted by one or more reasons related to their personal circumstances and eligibility as well as reasons related to UC migration and the claims process. The qualitative interviews also revealed that participants in those circumstances had complex and multifactor reasons related to perceptions of their eligibility and financial circumstances under UC as well as the process of making a UC claim. Interview participants who displayed this complex interplay of reasons did not think they would be eligible for UC and/or had negative feelings and perceptions about UC and the benefits system more generally. They did not claim UC even though in some cases they reported struggling financially. Their reasons included believing that they would receive a small amount of UC that did not make it worthwhile applying, mistrust of the system due to prior negative experiences on benefits, and for self-employed workers, a fear of financial insecurity due to fluctuating monthly payment amounts.

Likelihood and motivations to make a claim for UC

Seven in ten (70%) survey respondents were unlikely to make a claim for UC in the future, with 15% reporting that they were either likely or certain to claim UC. A further 15% did not know whether they would claim in the future. Whilst just over a third (36%) of respondents did not select any reasons that might motivate them to make a claim in the next 3 to 5 months, just over one half (53%) respondents selected at least one reason that might motivate them to make a claim. A change in work circumstances, needing the money, and a change in non-work-related circumstances were the most prevalent motivations (26%, 25% and 16% respectively).

Impacts of not claiming UC

Most (91%) survey respondents reported taking at least one financial action since their tax credits has stopped, including cutting down on spending (61%), using savings (41%), working additional hours (32%), using credit cards or overdrafts (28%) and relying on support from friends and family (23%). Uses of these alternative income sources to replace tax credits varied by work status, health status and age.

In the qualitative interviews, participants shared that the impacts of not claiming UC were sometimes wider than financial, with some reporting issues with stress, spending less time with their children, and cutting down on leisure time. Interview participants who could take on additional work hours and use savings that were not ringfenced for upcoming expenses reported feeling like they could cope financially and therefore felt no need to claim UC in the future.

Typologies of legacy tax credits customers who have not made a claim for UC

The qualitative interviews identified four non-claimant typologies which describe the interplay between reasons for not claiming UC, likelihood to make a claim in the future and impacts of not claiming:

1. Felt financially stable with no intention to claim: These participants described themselves as being financially secure, often due to a steady income or significant savings, and perceived that they would not be eligible for UC. They felt that UC was not relevant to their circumstances and described preferring to be self-reliant.

2. Upcoming change in circumstances with no intention to claim: These participants anticipated a forthcoming change in their financial circumstances, such as entering retirement or starting a new job, which they believed would render support from UC unnecessary. They reported that the application process would be burdensome and not worth the effort for short-term financial assistance.

3. Intended to claim but faced issues during the claim process: These participants planned to claim UC but reported challenges during the application process, such as technical difficulties or issues with supporting documentation. They cut down on spending and relied on friends and family to borrow money or offer means of support such as with childcare which they did not consider long-term options.

4. Struggling financially with no intention to claim: Despite reporting struggling financially, these participants chose not to claim UC due to a belief that they were ineligible combined with negative perceptions of the UC system and a lack of trust in UC and the benefits system, often stemming from past experiences. Participants in this group used savings, where possible, but did not consider this as a long-term option as their savings were required for other expenses. They also cut down on spending, borrowed, and relied on friends and family.

Current and future support needs to claim UC

Almost 4 in ten (39%) survey respondents reported needing support with making a claim for UC while over half (53%) did not feel they needed support from the options listed in the survey (remaining did not know). Those who did require support reported needing support to find out if they were eligible (27%), to find out how much money they would receive on UC (20%), and to make a decision about whether or not to claim (19%). Interview participants suggested the following information, communications and support would be beneficial:

• a fact sheet included with the Migration Notice
• an application checklist which includes the list of supporting documents required
• greater clarity on eligibility and capital rules in communications and by UC advisors
• greater flexibility in Jobcentre Plus appointments, including virtual options and drop-in sessions
• tailored guidance for self-employed claimants.

Claimants who delayed making a claim to UC

The survey findings revealed that 11% of survey respondents had since made a claim to UC since DWP had drawn the sample. The primary reasons for delaying making a claim for UC included frustration with needing to move to UC (33%), wanting to stay on tax credits as long as possible (31%), and the perceived effort of the claims process (24%). Those who had made a claim also reported personal circumstances as reasons for delaying including concerns about being worse off on UC (41%) and being unsure if they would be eligible for UC (23%). Motivations for claiming UC were primarily related to tax credits stopping (46%), needing the money (44%), changes in circumstances (23%), and the desire to receive a monthly benefit payment (22%).

1. Only reasons selected by 10% or more respondents from each category are reported. ↩

2. Reasons selected by 10% or more survey respondents. ↩