Research and analysis

Self-Employed Tax Credit Claimants Research

Updated 22 April 2025

Findings from research with self-employed tax credit claimants on behalf of the Department for Work and Pensions  

October 2024

DWP ad hoc research report no. 101

A report of research carried out by Ipsos UK on behalf of the Department for Work and Pensions.

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First published October 2024. 

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Executive summary 

Research objectives and method 

This research has been carried out to guide and inform DWP’s messaging and communications strategy ahead of the planned migration of all existing legacy benefit claimants to Universal Credit (UC) in 2022, to ensure that legacy claimants are effectively engaged and well informed about the transition. 

The focus for this research was self-employed tax credit (TC) claimants. 

Specifically, the research was designed to understand: 

• the motivations and drivers to self-employment and the role that current legacy benefits play in this 

• how self-employed legacy tax credit claimants think and feel about Universal Credit support in contrast to their existing financial support 

• awareness, understanding and perceptions of Universal Credit and attitudes towards the transition 

• key messaging areas or communication needs to motivate or change perceptions and support the consideration of a voluntary move to Universal Credit 

The research was qualitative in nature and comprised of 2 phases: Phase 1 consisted of 75 exploratory interviews. These informed the Phase 2 interviews and focus groups which tested the messaging. 

Phase 1: Exploratory interviews

Context of the self-employed 

Key motivations for choosing self-employment included the flexibility it affords, particularly for those with other responsibilities such as childcare, caring or long-term health conditions, and a sense of fulfilment and passion for what they do. 

However some had concerns around the unpredictability and fluctuating nature of self-employment income, which were exacerbated by the pandemic. 

Where participants were running their own business, some also had part-time employed work alongside, to provide a regular income and added layer of security. Self-employment could be seasonal, particularly for certain industries (e.g. gardening) and other employment was needed to supplement income when self-employment work was slow.

Tax credits: claiming behaviours, knowledge and engagement 

Self-employed participants felt that tax credits fit well with their established financial and work routines. The award was described as fitting into a carefully balanced budget and was hard to imagine surviving without. 

Very few reported experiencing any problems with receiving tax credits or managing their claim with HMRC, apart from a few instances of receiving an overpayment. All participants felt confident about what they needed to do at the end of each year for tax credits. 

Engagement with tax credits was low; it felt to most like a benefit that worked in the background. Most had not had any major issues with tax credits, so had not felt like they had needed to engage (which was seen as a positive). 

Reflecting this, detailed knowledge of tax credits was limited, though this was not perceived to be a significant problem. All participants felt they could say roughly how much they would receive in their next payment, and felt that they knew enough about tax credits in order to manage their claim effectively. 

Universal Credit: current awareness and understanding 

There were mixed levels of awareness of Universal Credit. Those who were aware of Universal Credit generally found out about it through media coverage and, in some instances, experiences of friends/family/colleagues. Typically, little was known of the specifics of what it offers and how it works. 

Negative perceptions prevailed, largely driven by negative press and media coverage including about gaps in UC payments, standard of living for claimants and the mental health impacts of claiming. Participants felt this coverage made UC sound like there was a lot of administration to manage the claim, which was deemed to be stressful and time consuming. This coverage also led to perceptions that they would receive less money on UC. 

Some felt that UC discouraged people from working, as employment would affect their claim.  

Universal Credit was generally viewed as ‘something different’ to tax credits and inherently perceived by legacy participants as ‘not for me’. The perception was that UC was an unemployment benefit for people unwilling and/or unable to work. In contrast, working tax credit was seen as a supplement to income/‘reward’ for those who are working and required a little bit of financial support. 

Universal Credit: Awareness and perceptions of a transition 

There were limited instances of participants knowing other self-employed people who had moved to UC, and very few participants had considered making a claim for UC. For most participants the research interview was the first time they heard about the planned migration. Initial reactions about moving were negative and apprehensive, and the majority struggled to spontaneously identify any benefits of moving to UC. 

Motivations and Messaging 

At Phase 1, self-employed tax credit claimants in this sample felt neither motivated nor positive towards a move. There was an overriding sense of contentment with current legacy benefits fuelling a strong desire to maintain the current status quo. 

To feel more informed, positive, and prepared, tax credit participants need more knowledge about Universal Credit. 

At Phase 1, there were 5 main areas of concern around a move to Universal Credit: 

• eligibility 

• monthly payments and reporting 

• automatic adjustment 

• missed payments 

• minimum income floor 

Tax credit participants expected the move to UC to be communicated well in advance, and across a range of channels and accessibilities. One of the biggest concerns about a move to UC amongst tax credit participants was not being informed well enough in advance to make any necessary adjustments to working hours, budgeting, and monthly spend etc.

Phase 1 Conclusions 

The conclusions of Phase 1 of the research highlighted 3 key areas to address for targeted messaging development.  

Self-employed tax credit participants need reassurances around the process, the risk of pauses/delays in payments, how UC compares to tax credits and, ideally, not being worse off, and the support available. 

Those who see Universal Credit as an “out of work” benefit need help to see how it is relevant to them. 

A lack of awareness of real-life examples of how Universal Credit has worked, or can work, for self-employed tax credit participants meant there was little confidence in the move. 

Phase 2: Message Testing 

Context of the Self-Employed 

Phase 2 identified 3 distinct groups of self-employed claimants in our sample: 

• those who run their own business 

• gig economy workers 

• freelancers or those providing a service but not through their own business 

Each of these groups had their own motivations and challenges, and the needs of each need to be taken into consideration in the messaging. 

Few participants were currently aiming to grow their business. A requirement to work more hours was seen to risk making self-employment unmanageable. 

Universal Credit: Baseline Perceptions 

Despite varying levels of understanding about Universal Credit, all felt worried to some degree about the prospect of moving to UC. 

Awareness of Universal Credit was mixed, and no one group amongst self-employed participants stood out as more informed than any other. 

Understanding: There were a lot of unknowns about how it works, and the predominant emotional association with UC was one of worry and unease. 

Concerns included the delay in the first payment, a change in the amount received, and questions about eligibility. 

In terms of motivations, there was little to push participants away from legacy benefits or to pull them towards UC. 

Participants were not confident on the main differences between what they were receiving through tax credits and what UC would offer. They had concerns about eligibility which made some unsure whether they would be able to receive UC.

Messages 

Time had a large impact on how self-employed participants responded to messages. Participants were reluctant to spend any time away from work or other responsibilities, such as childcare. Tax credits were viewed as a passive benefit, however they felt that Universal Credit would require much more engagement due to the gateway interview, monthly reporting and quarterly meetings. Their time felt very valuable and they were able to quantify the impact time away from work would have. 

The message testing identified that there are sensitivities around the language used, such as becoming “less reliant on benefits” (they didn’t see themselves as reliant) and “taking steps to grow their earnings” (this was not realistic for many, and others worried what would happen if they took steps to grow but did not succeed). Adjusting the language of being reliant on benefits and more widely relevant steps to grow earnings would increase appeal. 

Monthly reporting felt daunting and like a big ask of their time. Providing reassurance that support will be available to help claimants get to grips with monthly reporting could help ease fears. Whilst moving to monthly payments was not a major concern for this group, there were a few that expressed concerns about budgeting. Signposting to budgeting support would reassure those who are concerned about the move to monthly payments. 

In contrast, fluctuating payments also did not present a serious concern, it was even seen as a fairer system by some. 

The messaging made it clear how gainful self-employment is worked out. Few concerns existed about not being classified as such, although clarity was needed for those who are both employed and self-employed. The ‘Gateway Interview’ with the Work Coach was mentioned by some to feel daunting, with concerns raised about the time they would need to spend away from work to attend or whether the Work Coach would be qualified to understand the business. Avoiding the term ‘interview’ might make this meeting feel less daunting. 

The conditions of gainful self-employment did not come as a surprise to participants. However, there was concern amongst those who do not feel able to grow their self-employed work either due to constraints such as childcare or unpredictable business costs meaning growth may not occur every quarter. Similarly, the conditions of non-gainful self-employment were understood and unsurprising. There were still some questions about what the requirements would be if they are mainly employed and self-employed on the side, so more clarity for those who are self-employed and employed would help. 

The purpose of the quarterly meetings was easily misunderstood and could be off-putting. People were unsure about its purpose and usefulness, and concerned about time away from their business. 

There was confusion and uncertainty around how the Minimum Income Floor is calculated, which was stressful for participants. The wording was unclear and frequently misunderstood – causing serious concerns for participants. 

Participants wanted clarity on how their appointments will take place to fit around work and other commitments (i.e. online, over the phone, or in person at a Jobcentre) and to feel able to have a say on how and when these appointments take place. 

Receiving payments on time and reporting changes in circumstances are the same as tax credits and so did not feel noteworthy to participants. 

Regarding advances, the implication of a period without payment was stressful, and more clarity was wanted on how repayment would work. This audience were likely to be debt averse and therefore uncertain about how willing they would be to accept an advance without more details about how it works.

Online and telephone support was appreciated, but past experiences and scepticism still coloured participants’ expectations of effectiveness. 

Universal Credit: Impact of messages on perception and willingness to move 

As self-employed participants learnt more about how UC works, they became less willing to move to UC. The information about UC which lacked appeal to customers was:  

• more time required from UC than tax credits through monthly reporting of income and expenses and more Work Coach meetings means time away from generating an income and from other responsibilities like childcare 

• misunderstanding and scepticism about the usefulness of Work Coach meetings

• worries about the introduction of the Minimum Income Floor (MIF) after one year of claiming UC, particularly given uncertainty about what the amount it is set at 

• feeling unable to grow their business or increase their existing income – they were used to the status quo

Messaging about the MIF stood out as the most likely to negatively impact impressions of UC. The main areas of concern around the MIF were: 

• whether it would be calculated fairly 

• not knowing exactly what the MIF is 

• whether a year would be long enough to reach the MIF 

Customers would like more clarity around how the MIF will be calculated and what it is likely to be set at. Case studies of different types of self-employed claimants’ first year on UC could help with this. 

Messaging around monthly reporting of income and expenses also led to negative responses from participants. The main areas of concern around monthly reporting were: 

• that it represents a big change from how tax credits work 

• it will involve the stress associated with annual reporting on a monthly basis, which means more time not working

Conclusions 

Perceptions around UC were negative or, at best, indifferent. This was due to low awareness and a lack of knowledge. 

Ingrained behaviours and attitudes towards claiming and self-employment can mean that any form of change is inherently seen as negative. 

Experiences of being self-employed were not universal which could have a significant effect on how messages are received and their impact on shifting perceptions. 

None of the messages tested were perceived to be highly motivating or reassuring. Conversely, a number of messages served to compound already held negative perceptions and concerns.

Research Aims and Methodology 

Background 

Ahead of the planned migration of all existing legacy benefit claimants to Universal Credit in 2022, research was required to guide and inform DWP’s messaging and communications strategy to ensure that legacy claimants are effectively engaged and well informed about the transition. 

Research objectives 

The audience for this research was self-employed tax credit (TC) claimants whose needs and experiences are expected to differ to other Universal Credit claimants and for whom the Universal Credit policy and support offer is significantly different. 

The objectives of this research were to help the Department for Work and Pensions shape communications for the move to Universal Credit for self-employed claimants and ensure claimants who are self-employed and transitioning from tax credits to Universal Credit are prepared, motivated and well informed.  

Specifically, the research was designed to understand: 

• the motivations and drivers to self-employment and the role that current legacy benefits play in this 

• how self-employed legacy tax credit claimants think and feel about Universal Credit support in contrast to their existing financial support 

• awareness, understanding, and perceptions of Universal Credit and attitudes towards the transition 

• determining key messaging areas/communication needs to motivate or change perceptions and support the consideration of a voluntary move to Universal Credit 

Methodology 

The research comprised 2 phases:  

Phase 1 consisted of exploratory qualitative interviews with self-employed tax credit claimants. This comprised 75 depth interviews with quotas set on age, gender, location, length of claim and type of claim (Working Tax Credit (WTC) only, Child Tax Credit (CTC) only, or both WTC and CTC together). This was conducted in October to December 2021. 

The findings from Phase 1 informed Phase 2 of the research. This comprised depth interviews and focus groups with self-employed tax credit claimants to test messages about the Move to UC, in January to March 2022. Two ‘mini’ focus groups (1 x 3 participants, 1 x 4 participants) were followed by 23 one-to-one depth interviews, with quotas set on age and gender, location, length of claim and type of tax credits claimed.

Phase 1 Findings: Exploratory interviews  

Context: The Self-Employed 

This chapter looks at the characteristics of the self-employed, including motivations, concerns, and their situation. 

Motivation for choosing self-employment 

The flexibility of self-employment was a significant motivator for many, particularly for those with other responsibilities. For these individuals, the autonomous and flexible nature of self-employment was perceived to be a much better ‘fit’ than working for an employer. It was seen to better enable them to balance work alongside caring responsibilities, childcare commitments, or to accommodate a long-term health condition. 

For those working in transient industries (e.g. music, TV production, counselling or seasonal farm work), self-employment was considered  the ‘norm’, with very few opportunities available to work as a permanently contracted employee.  

I could only manage part time as I was also looking after my son who had mental health problems. 

Working tax credit claimant 

I like being self-employed, it can work around my kids and their holidays and I can manage my own time.

Working and Child Tax Credit claimant 

It’s the nature of the work. Clients book you on small contracts to do animation projects. That’s why I am self-employed. 

Working and Child Tax Credit claimant 

Participants regularly demonstrated high levels of passion, dedication, and commitment for both what they were doing and how they were doing it. For many it was hard to imagine getting the same sense of fulfilment from doing something different and/or working as an employee. 

While tax credits had not necessarily been the key driver or motivator to self-employment, they were described as being highly valued as an enabler to it. 

I hope to continue doing what I am doing… I love it! 

Child tax credit claimant 

I see it [tax credits] as a buffer. Gardening is really seasonal. So January, February, March, there is no work and money. We need tax credits to live on. 

Child tax credit claimant 

I prefer being self-employed, as I can work at home, choose my hours and not answer to anyone. I can also look after my son, who has learning disabilities and who I used to home school. The tax credits money allows me to be self-employed and work lesser hours so that I can care for my son, who needs a lot of support. 

Working and Child Tax Credit claimant 

Concerns around self-employment 

Those who had experienced reductions in, or loss of, income resulting from the pandemic had heightened concerns around the unpredictability and fluctuating nature of self-employment income. 

Similarly, some of those with long term health conditions had concerns about the progression of or potentially debilitating nature of their condition. In particular, some had concerns about the impact their health condition could have on their ability to work and the lack of income protection (e.g. sick pay) available to them. 

Well there is no guarantees of money with the business. There are ups and lows, so it really is a bridge for us during the difficult months…it’s not like when you are employed, where your income stays the same. 

Working tax credit claimant 

It really does worry me, as I don’t know how long I can clean for as my physical heath is deteriorating.

Working tax credit claimant

Situation specifics 

Some self-employed participants also had part-time employed work alongside, to provide a regular income and added layer of security. For many this was seen as a temporary measure in the early stages of self-employment which they hoped to phase out once they were able to support themselves with the income from self-employment alone. For others this had resulted as an impact of the pandemic and the need for more stability going forward. 

For seasonal self-employment such as gardening, other employment was needed to supplement income when self-employment work was slow.

Case study: Kiera

After qualifying as a counsellor 5 years ago, Kiera has slowly been building her client base.

She is limited to working in the hours of the day when her young son is at school, as she is a single parent.

Her income from counselling is unpredictable, so she still has a part-time job helping with bookkeeping at a construction company 2 days a week.

The steady income she receives from her work as an employee means she does not have to worry if she does not have many clients.

Tax credits: Current claiming behaviours, knowledge and engagement 

Claiming Behaviours 

Tax credits customers’ claiming behaviours were well established. Self-employed participants felt that tax credits fit well with their established financial and work routines. Often the award fit into a carefully balanced budget and was hard to imagine removing. 

Very few reported experiencing problems with HMRC or receiving their award. The only negative experiences were those who had been over-paid and subsequently required to pay money back to HMRC. 

All participants felt confident about what they needed to do at the end of each year to renew their tax credits claim. Many participants had been repeating these behaviours every year for a long time, sometimes over a decade, and their situation has not changed for a long time. 

Knowledge 

Participants’ detailed knowledge of tax credits was limited, though they did not perceive this to be a significant problem. They generally felt content in what they knew about tax credits and how it related to their personal circumstances, although most struggled to explain exactly how their award was calculated. For some, this low awareness of how tax credits are calculated contributed to or created a fear of over-payment.  

However, all participants felt they could say roughly how much they would receive in their next payment and felt that they knew enough about tax credits to manage their claim. Most felt confident and satisfied about their ability to resolve any issues should they arise (either by contacting HMRC directly by phone or checking GOV.UK). 

I feel that I know very little. I don’t know how they make the calculation… I have reported changes before and they still overpaid me, so I don’t know what happened there. It was quite frustrating. 

Child tax credit claimant 

I feel that I understand it enough to be on top of it all… I don’t think there is anything I don’t get about it. 

Working tax credit claimant 

Me and my husband both have degrees and we look at that letter and don’t know how they have worked it out…we just accept it and say, ‘It must be about right.’ 

Child tax credit claimant

Engagement 

Participants tended to only engage with tax credits once a year when they had to renew; few were reporting changes on a regular basis. 

It felt to most like a benefit that worked in the background. Most had not had any significant issues with tax credits, so had not felt that they had needed to engage with it. This was particularly the case for those running businesses, who felt that tax credits was set up to work quietly in the background and let them focus on their work. This low maintenance nature of tax credits was highly valued.  

As most felt they knew what they needed to in order to understand how tax credits work for them personally, there was little motivation to seek out new information about tax credits. 

When things are going well for me, I don’t consider them at all. I only ever contact them when there’s a problem. I can concentrate on what I need to do and that’s building my business so I can start making some money so I don’t need to claim the benefits.

Working and Child Tax Credit claimant 

I don’t think I am that engaged with it as nothing has gone wrong. I have very little do with HMRC.

Child tax credit claimant

Case study: Helen, 46 – 55

Profile

Helen is in her early 50s and live with her elderly mother in a rural village. She has run her own online business selling records online and at records fairs since 2006. She has claimed Working Tax Credits for the majority of that time.

In the future, she hopes to build an extension at home so she can store more records to sell.

Awareness, understanding and engagement with current benefits

It was her accountant that first suggested that she claim Tax Credits. Before that, she had not considered whether or not she would be eligible, and did not know much about them.

Although she says she doesn’t feel overly reliant on them, she believes that without Tax Credits she would really struggle to pay for the basics like food and heating.

She knows very little about how it works besides that it tops her wages up a bit. She knows roughly how much she receives, but could not say how it was calculated.

When she made her first claim, her accountant told her what information she needed to share with HMRC. Since her first claim in 2006, she does not think she has learned anything new about Tax Credits. She is very comfortable in her existing routine even though she does not feel very ‘engaged’ with Tax Credits.

“I’ve never had any issues getting my money. It’s a useful top up for my wages, but I don’t really think about it much if I’m being honest.”

Key takeaway

Low engagement and understanding of how Tax Credits works, but highly valued as a means of ‘topping up’ self-employment income.

Universal Credit: Current levels of awareness and understanding 

Awareness 

There were mixed levels of awareness of Universal Credit. Those with little or no awareness of Universal Credit were also likely to demonstrate minimal engagement with their existing tax credits claim. 

I’ve only heard about UC from the press. I don’t know anything about it. I presume UC is just another name for working tax credits and that award will remain the same. 

Working tax credit Claimant 

Those who were aware of Universal Credit had generally found out about it through media coverage and, in some instances, experiences of friends/family/colleagues. Typically, little was known of the specifics of what it offers and how it works. 

I’ve only heard negative stories. You get less money on Universal Credit…no one seems happy on it. You get it paid monthly, rather than weekly. 

Working and Child Tax Credit claimant 

Perceptions 

Participants were most likely to have negative perceptions of UC. Participants cited negative media coverage and hearing about people experiencing a 6–7-week gap before their first payment. This was seen as a significant deterrent to claiming.  

Participants felt a payment gap would be particularly challenging for them to manage due to their fluctuating self-employment income. They reported that they would not know how they would pay their bills in such instances and were concerned that these could get out of control. 

Media coverage regarding the end of the £20 uplift put in place during the Covid-19 Pandemic and knowledge of families who are worse off on Universal Credit led some to believe that they would receive less money on Universal Credit. Participants felt that this would make managing their finances and budgeting more challenging. 

Stories in the press portraying Universal Credit requiring more time to manage and administer the claim meant it was also perceived as more time consuming and potentially stressful than claiming tax credits. 

Related to these concerns, participants had concerns around their standard of living and mental health being negatively impacted.

I have heard stuff in the papers about people not getting their money on time and that people are in a much worse state on UC.

Working and Child Tax Credit claimant 

It gives me a knot in my stomach every time I hear the word…you hear a lot of stories about people waiting a long time for payment.

Working and Child Tax Credit claimant 

The problem with that is Universal [Credit] can take up to 7 weeks of delays, possibly lost income, which could affect my basic standard of living. 

Working tax credit claimant 

Understanding 

There was little understanding of how Universal Credit works amongst these self-employed tax credits participants. For example, some did not know enough to answer when questioned about Universal Credit and some stated that they were “waiting for them [DWP] to tell me” what it means and offers. 

I’m not that clued up on it. I just heard in a letter they sent me that there would be a move over to Universal Credit in the future.  

Working and Child Tax Credit claimant 

Participants who had read about Universal Credit on GOV.UK were generally aware that UC is paid monthly. There was some concern that this would be more difficult to manage and make budgeting harder. 

I know what I’m doing now but if it all changed it would bring my anxiety up again and I’d probably just stop working. 

Working and Child Tax Credit claimant 

There continued to be misperceptions and misunderstandings about how UC interacted with work. Some felt that Universal Credit discouraged people from working, as employment would affect their claim. This view came from participants who described knowing people who refuse to work over 15 hours per week for this reason. However, there is no limit to how much someone can work and claim UC. 

Some of my clients, who own cafes and things, say they struggle to get staff to work more than 15 hours, because they are restricted by UC…so it’s holding people back from working more. 

Working and Child Tax Credit claimant 

Universal Credit was viewed as different to tax credits and perceived by legacy participants as not for them. UC was seen as for people who were out of work. The self-employed tax credit claimants in this sample contrasted this to their own hard work and at times held negative stereotypes about people who were out of work, further distancing themselves from this group.  

In contrast, working tax credit was seen as a supplement to income for those who were working and required a little bit of financial support. 

There was a distinct lack of awareness as to how UC, as an unemployment benefit, could benefit the self-employed. Participants felt they had very different needs to current Universal Credit Claimants and didn’t feel they required the same level of help that Universal Credit Claimants need. 

Universal Credit is quite broad and doesn’t think about actual human life and the effect it has on people…tax credit allows you dignity, Universal Credit does not. 

Working and Child Tax Credit claimant 

I just think of it (UC) as being for unemployed people. You know those who can’t be bothered to work…I think it’s because all the benefits have been lumped into one…so you have those who are working and aren’t working in one. There’s a real stigma in my opinion. 

Working and Child Tax Credit claimant 

I suppose I’ve been used to the security of tax credits for the last 10 years. The idea of changing to something else, where there might be a lot of hassle involved, doesn’t appeal. 

Working and Child Tax Credit claimant 

They have just lumped us all together. Us that work hard with people who don’t work at all. 

Working and Child Tax Credit claimant

Universal Credit: Awareness and perceptions of a transition 

Awareness 

There were limited instances of participants knowing other self-employed people who had moved to Universal Credit. For most participants, the research interview was the first time they heard about the planned migration. 

Those who had heard about the move (either from the JCP or through a friend or family member) were unsure of the details, how it would work, or what Universal Credit would offer. 

Very few participants had considered making a claim for Universal Credit. Those who had, said this was because they knew of the planned migration. They had not completed the claim as they found the process too complicated and thought they would receive less money on Universal Credit. 

Participants reported that they would not know how to move over to Universal Credit if they wanted to. They were unlikely to consider this without knowing the specifics of how it works and, importantly, how much money they would receive. 

It’s basically the same thing, but more of a headache. I think it would take longer and that you won’t get paid on time. 

Working and Child Tax Credit claimant 

I did consider it last year, when I read that everyone will be changed over to UC eventually. I Googled it and then thought, ‘I am happy with tax credits, why change?’. 

Working and Child Tax Credit claimant 

Perceptions of transition 

There were varying levels of knowledge about Universal Credit, but initial reactions about moving were negative and apprehensive. 

Among those with little or no knowledge of UC, responses to claiming it were neutral. These participants struggled to make any comment about how they were feeling, as they did not know enough about UC to form an opinion either way. 

Among those with some knowledge of UC, responses to claiming it were negative. Although most did not know much about Universal Credit, they knew enough to know they did not want to claim. These opinions were generally informed by stories in the press.  

Will it impact me negatively, as I know that some people look down on UC? I am apprehensive.

Working tax credit claimant 

I honestly don’t want it to happen. It’s the unknown of if it will work or if I’ll be financially secure. I know what I’m doing now, but if it changed it would bring my anxiety up again and I’d probably just stop working. 

Working and Child Tax Credit claimant 

I think you lose out on money on UC…I don’t, won’t do it, without them asking me to…so I will wait until I am asked to…do you know why we get less money on Universal Credit?

Working and Child Tax Credit claimant 

Overall, few benefits were associated with moving to UC. Some participants felt that one benefit to moving before the deadline was missing any potential administrative rush associated with all tax credits claimants moving. Those who identified this as a benefit felt they may have less problems (for example, payment delays or incorrect benefit calculations) if they did so. 

I don’t think I’ll be entitled to it, as I only receive a small amount. But if I do qualify, I would prefer to move before the big rush, the deadline when everyone is switching. 

Child tax credit claimant 

A further benefit was the simplicity and ease of managing all of their benefits in one place, with one point of contact. This was seen to be potentially more straightforward and less stressful than having multiple income streams and organisations to contact.  

We’re going through with the Housing Benefit and the way they do it is completely different from how tax credits is calculated. It’s really stressful. So the idea of having everything dealt with as a whole in the same manner. That appeals to me massively. 

Working and Child Tax Credit claimant 

Some participants were happy to move to Universal Credit if it resulted in them being in a better position financially, though they doubted that it would. 

Participants had mixed reactions when prompted with information about Universal Credit1, with some ‘benefits’ also having drawbacks. 

Some found the work coach offer useful, and were grateful for any extra help for them to grow their business and earn more money. However, it was seen as patronising by some, due to the perception that the work coach would not understand their business. 

The work coach sounds amazing. Any information on how I can make more money is helpful.

Working Tax and Child Tax Credit claimant 

The childcare offer was seen as useful, although participants would need specific detail about what it covers specifically, as well as the ages of children. 

Participants were strongly negative towards automatic payment adjustment. They felt it reflected a lack of understanding from DWP to the fluctuating nature of self-employment income.  

Automatic adjustment makes me nervous as it’s not like I earn enough in my busy months to get nothing in my quiet months.

Working tax credit claimant 

There was confusion around conditionality which created concern.

Case study: Jane, 36 to 45

Profile

Jane is a single mum with 2 children. She used to work as a hairdresser at a salon, but recently became mobile as she felt lots of her earnings were going to the salon owner.

She also rented her own salon for a few months before becoming mobile. She enjoys the freedom of being self employed, and being able to plan this around childcare.

Awareness, understanding and engagement with current benefits

Tax credits are essential for Jane as they top her her rent and her bills. She has been claiming for nearly 18 years and “cannot do without them”. She finds the process of claiming easy, commenting that HMRC are always helpful and friendly on the phone.

Universal Credit

Jane has a negative perception of Universal Credit, as she has a friend who was not paid on time and struggled with their bills as a result.

Jane knows little about how Universal Credit actually works, with her opinions being formed on things she has heard in the media and the experience of her friend. She’s concerned about what she’d do if she didn’t understand the system and where she’d go for help, and was especially worried there’d be no-one to speak to on the phone.

Jane doesn’t want to move over to Universal Credit as she is happy with Tax Credits as they are and is comfortable with her current system.
“They [Universal Credit] are so unorganised. I think it is an unfair system.”

Key takeaway

Low engagement with Tax Credits, but they are deemed as essential. A switch the the unknown of Universal Credit is concerning.

Motivations and messaging 

Motivations to move to UC 

The vast majority of self-employed tax credit participants in this sample felt neither motivated nor positive towards a move to UC.  

There was very little positivity around a move to UC. Those who had claimed more recently or those with very low awareness of UC were most likely to be positive or neutral towards claiming. For most, the prospect of a move was met with questions, worries and concerns. 

I won’t move voluntarily, because of all the negative stuff I mentioned. The less money is the main thing.

Working and Child Tax Credit claimant 

There was an overriding sense of contentment with current legacy benefits fuelling a strong desire to maintain the current status quo. There was little to prompt or motivate a change and nothing either pushing or pulling tax credit participants to move to UC. 

“Why change when I’m perfectly happy with tax credits?! All I’ve heard is bad stuff about UC. 

Working and Child Tax Credit claimant 

I won’t move until they write to me and explain UC to me and ask me to move. I am too busy running my business to voluntarily get information and move, without them telling me ‘it’s time’.

Working tax credit claimant 

Concerns to address 

To feel more informed, positive and prepared, tax credit claimants needed more knowledge about UC. Key questions and concerns raised by participants were: 

• what they need to do to claim 

• eligibility 

• how UC is different to tax credits 

• the financial impact 

• any delay to payments 

• the benefits of UC for self-employed people 

• when and how claimants can switch to UC 

• why the government are moving claimants from tax credits to UC 

• how it will impact other benefits (like Carers Allowance and DLA) 

• how fluctuating income will affect eligibility and payments, including timing of payments and amounts 

• if UC is for self-employed people 

• whether they will be encouraged to move into employment 

I’m about 50/50 at the moment. Until I’ve done more reading, I can’t comment. I’d be wanting to find out if it was going to affect my carers allowance, how being registered disabled myself would affect it… 

Working tax credit claimant 

[To encourage me to claim] Remove the stigma of being associated with unemployed people.

Working and Child Tax Credit claimant 

There’s loads of bad press about Universal Credits. Why doesn’t the government put out some good stories about moving to UC. Or even some difficult experiences and how they were resolved quickly. 

Working tax credit claimant 

There were 5 main areas of concern around a move to Universal Credit. Some were concerned about the potential loss of, or reduction in, benefits due to differing eligibility criteria (for example, the impact of savings) and/or how Universal Credit might work alongside other benefits (such as housing benefit). 

Many were used to budgeting on a weekly basis and the shift to monthly payments on UC was seen to create challenges with financial management including managing bills, mortgage / rent payments, and childcare.  

A move from an annual to a monthly reporting cycle was a key concern for many. The annual reporting cycle was seen to allow for and smooth over monthly fluctuations in income, in a way that monthly reporting was not seen to. In addition, a monthly reporting cycle was seen to increase the administrative requirement for claimants. 

Participants were particularly concerned about automatic adjustment. Many felt this reflected a lack of understanding from DWP. The prospect of getting minimal payments during some months was particularly troubling. This perhaps reflects a lack of understanding that the automatic adjustment was designed to ensure their monthly income remained consistent and a shift from the tax credits system of receiving a consistent payment year-round, regardless of their income from self-employment. 

One of the largest concerns was around payments during the transition period and whether or not these would be received as back payments. A lack of financial support – which was seen as an integral part of participants’ budgets – for a month added to levels of anxiety around financial management. 

Participants found the Minimum Income Floor very confusing and found it difficult to understand how it would apply to them and how it would work in practice. 

Communication 

Self-employed tax credit claimants in this sample expected a move to UC to be communicated well in advance, across a range of channels and accessible to different audiences. 

One of the biggest concerns about moving to UC amongst participants was not being informed well enough in advance to make any necessary adjustments to working hours, budgeting, and monthly spend. 

Participants also expressed a need for communications about moving to UC to be accessible and available across a range of platforms and mediums (including audiovisual channels). This was particularly the case amongst those with long-term health conditions or who are neurodivergent. 

Write, rather than e-mail or text, as people ignore that stuff from HMRC…Also send out a separate letter, rather than with other TC information. Whenever I get anything extra in my letter, I just look at the important stuff (i.e. TC statement) and don’t bother looking at anything else.

Working tax credit claimant 

If they want to make it easy for us to transition, maybe it will be helpful for them to write to us. Based on your circumstances, what you have now, most likely, you will get this…They have everything, so based on that information they could write to each of us and make us not be so scared to move.  

Working and Child Tax Credit claimant

Key considerations for targeted messaging development: Phase 1 Conclusions 

The conclusions of Phase 1 of the research highlighted 3 key areas to address for targeted messaging development. 

Reassurance 

To feel more positive about a move to UC, self-employed tax credit participants needed reassurances around: 

• the process of moving over and mitigations to any risk of pauses or delays in payments 

• the financial impact of claiming and how UC compares financially to tax credits 

• how to access support 

Relevance 

Participants who saw UC as an out of work benefit needed support to see how it was relevant to them. This group needed information on how UC related to and would support people who were self-employed and how it would cater to those with an unpredictable and fluctuating income. 

Real Life 

Information which is grounded in real life examples and scenarios would help to reassure this group. Participants wanted information which was relatable and rooted in the reality of what life would look like on UC.

Phase 2: Message Testing 

Context: The Self-Employed 

Building on the findings from Phase 1, Phase 2 identified that ways of working and personal goals for the future informed what kinds of messages about UC are likely to resonate. 

Three groups were identified amongst the self-employed claimants in our sample: those who run their own business, gig economy workers, and freelancers. 

Those who run their own business 

The key features of this group were that: 

• their hours and income can vary a lot 

• they were dedicated and committed to keeping the business going 

• they felt time-poor and that work absorbed all their spare time, including activities not directly related to bringing in revenue such as promoting the business and expenses 

• most felt they were just managing to keep afloat rather than being able to grow the business

Gig economy workers 

The key features of this group were that: 

• they often did not immediately identify as self-employed 

• they had less flexibility in their hours than other self-employed participants 

• they felt there was less prospect to grow and expand their income from their self-employed work as their earnings are fixed by their employer 

• because of this, messages about profitability or calls to expand their business did not resonate or feel relevant  

Freelancers / providing a service but not through their own business 

The key features of this group were that: 

• they were most likely to be happy with how many hours they work and how it fit with the rest of their responsibilities 

• they were unwilling to work more hours as they felt this would risk upsetting their work-life balance 

Few self-employed participants in this study were currently aiming to grow their business. Many had been claiming tax credits for a number of years and their working situation had largely remained unchanged (otherwise they would have already been moved to UC). They felt they had a carefully managed equilibrium between work and other responsibilities. 

Plans for the immediate future of their self-employment therefore rarely involved growing their business. These participants felt that a requirement to work more hours would risk making their self-employment unmanageable. 

It was therefore much more common for participants to want to sustain, rather than grow, their business, particularly given the current economic climate and cost of living. 

I set up my own business, which was doing really well, and then I had an operation that went horribly wrong and I ended up disabled,10 years ago. As a result of that, I ended up as a single parent because my husband didn’t want a disabled wife, or children, it would seem. I had to evolve what I was doing into a business that I could run from my bed because I had to have 24-hour care. I couldn’t get out of bed, I couldn’t move. Now I’m a business coach. But I’m in a lot of pain so I’m very limited in the hours that I can work. Also, my children have got special needs, so that’s another level of complication… there are other people in similar situations that cannot work for somebody else or cannot work more hours…it’s not realistic at all. 

Working tax credit claimant

Case study: Eleanor, 36 to 45, 5 to 12 years claiming Tax Credits

Eleanor currently works as a bookkeeper and is a single parent of 2 young children. The hours she is able to work are very restricted, as they are contingent on when her children are at home. They can also be quite random – the odd hour in between drop offs or when they kids have gone to bed etc.

She currently feels she is working the maximum number of hours it is possible for her to do. The suggestion that she needs to grow her business therefore does not feel achievable.

Key takeaway

A requirement to work more hours would risk making self-employment unmanageable, which for some would be required when they move to UC.

Universal Credit: Baseline perceptions 

Following on from the Phase 1 work which identified a lack of awareness and understanding about the move to UC and concern among the self-employed, Phase 2 explored the factors that would impact on the messaging. Despite varying levels of understanding about Universal Credit, all participants expressed some degree of concern about moving to UC, which would need to be allayed through messaging. 

Awareness and understanding 

Awareness of Universal Credit was mixed, and no particular group amongst self-employed participants stood out as more informed than any other. 

The most mentioned association self-employed participants had with UC was that it is an umbrella benefit that rolls several payments in to one. While the benefit of doing this was understood, there were still some fears of receiving a lower payment and budgeting being harder. 

The main idea of it seems to be this simplification or rolling up thing, which I guess is double-edged. 

Working tax credit claimant 

The predominant emotional associations with UC were worry and unease. There were a lot of unknowns about how it works, and how much money participants would receive. They were worried that receiving less money would require a significant change in how they organise their lives. 

It seems to be that there’s a simplification of it but I fear that is going to be used as a tool to reduce things and all of that kind of thing. My experience of benefits is they can be complex and things like this but there are reasons for it being complex. 

Working tax credit claimant 

Specific concerns 

More specific concerns about UC involved the delay in first payment, a change in the amount received, and questions about eligibility. Less common, but still mentioned by participants, was a worry about the delay in their first payment. More knowledge of the Advance Payment could help ease fears. 

I’ve heard that there’s a delay in people getting payments and they’ve got to seek out loans and things. I don’t know. I really just don’t fancy having to move. 

Working tax credit claimant 

Participants also expressed concerns that they would not be eligible for UC. These fears were closely related to the worry about UC being an ‘umbrella’ payment. 

So, for Working tax credit and Child tax credit, they disregard [Child] maintenance and for Universal Credit, they regard [Child] maintenance and, so, it will tip me in to being in a too high a bracket so I will become ineligible. So, they need to sort out some transition relief.

Working and Child Tax Credit claimant 

Concerns about receiving less money on UC were exacerbated by stories in the news and from friends and family. The end of the £20 uplift put in place during the Covid-19 pandemic in particular was mentioned. 

Some people that I know that have transitioned across- […] I know that their benefit entitlement reduced significantly.

Working and Child Tax Credit claimant

Motivations 

There was little to push participants away from legacy benefits or to pull them towards UC. 

Push motivators (lack of) 

Participants had a strong status quo bias. Their comfort and familiarity with current legacy benefits created little motivation or perceived need for change.  

Loss aversion due to concerns about the potential to experience delays in payments on UC, to be worse off (in the short and/or longer term) or to lose benefits also acted as a motivator to continue claiming legacy participants.  

Pull motivators (lack of) 

Participants saw little or no advantage to moving to UC. UC was perceived to lack relevance. Participants who were not actively looking to change their current working behaviours were not interested in the UC support offering. In addition, they expected that their award would reduce in value and believed that UC did not incentivise work in the same way as tax credits. 

The lack of awareness of positive experiences and outcomes for UC claimants also did little to motivate participants to claim. They expressed concerns about the transition process to UC.  

I don’t see what the pull factor would be to switching at this point because the system is working fine and there’s no incentives to switching of my own accord. 

Working tax credit claimant 

Universal Credit is putting more and more families in food banks, it’s making more and more kids go without food on a daily basis and I think it’s absolutely disgusting. 

Working and Child Tax Credit claimant 

The lack of detailed information about how UC will impact their situation put the majority of participants in “amber” on a self-rated traffic light rating about moving to UC. An “amber” rating meant: “I am uncertain about moving to Universal Credit. I would like more information about it first. I do not know enough about the move and feel nervous about the idea of it.” 

Self-employed participants were not confident on the main differences between what they were receiving through tax credits and what UC would offer. They did not know: 

• how much they would receive 

• how and when they would receive it 

• whether it changed over time or stayed the same if their circumstances remained the same 

Participants had concerns about eligibility and were unsure whether they would be able to receive UC. Therefore, they felt they would need more information before they could confidently say they would be happy to move earlier than they had to. 

Negative stories about UC had largely come from the press or anecdotally through friends and family. Most wanted to research UC more thoroughly before making a decision. 

I wouldn’t jump off a cliff and say, ‘Yes, I’d definitely go without looking into it.’ Because I think that would be foolish, but I wouldn’t rule it out […] I would just probably investigate and take a view and then see. 

Working and Child Tax Credit claimant

Messages 

Time 

Participants were reluctant to spend any time away from work or other responsibilities. Monthly reporting and work coach appointments were therefore off-putting. 

Tax credits were valued as a passive benefit, not requiring much engagement or time. This was seen to allow participants to get on with work and other responsibilities such as childcare. In contrast, UC was seen to require more engagement and time due to the gateway interview, monthly reporting of income and expenses, and quarterly meetings. 

Time away from work and other responsibilities like childcare was very unappealing to this audience. They could quantify how much attending a UC meeting, for example, would cost them. 

It’s time that you are not working, so then your £100 that you’ve earned has got to be divided by hours that you haven’t actually gained income even if that’s half an hour travel each way and a half an hour meeting that’s you know, an hour and half you have not earned.

Working and Child Tax Credit claimant 

It takes me all my time to do my tax return every year, never mind every month. That would be difficult for me

Working and Child Tax Credit claimant

Case study: Mary, 46 to 55, under 5 years claiming Child and Working Tax Credits

Mary lives in the Scottish Highlands with her young family. She runs a sports therapy business and also sells beeswax with her husband. Both businesses require a lot of time and energy.

If she were required to go in to a JCP, it would be a 4 hour rounds trip. She is therefore very anxious to know if she could conduct her meetings with JCP staff online. She is also very wary of how long it would take her every month to calculate the income and expenses of both businesses.

Key takeaway

Claimants want to feel like they have a say over how, when and where they are required to dedicate time to meeting UC requirements, e.g. setting the times and place of meetings with work coaches.

Language used about UC

From the message shown in the survey questionnaire, the way that UC works for the self-employed was well understood, but there were some sensitivities around language used.

Universal Credit and the self-employed

Universal Credit seeks to support the self-employment where it is the best route for someone to become more financially independent and less reliable on benefits.

We expect claimants to take steps to grow their earnings. This may include accessing external advise or support, undertaking activities to raise the profile of their business, or even combining self-employment and employment.

Source: Phase 2 qualitative research stimulus 

Participants easily understood the underlying difference between tax credits and UC support was that UC support expects a certain amount of earnings growth and does not promise to support them forever. 

However, the suggestion that self-employed participants are currently reliant on benefits was received negatively. They saw benefits as a safety net. 

Those who felt they were already taking steps to grow their business were frustrated by the lack of acknowledgement of this. This raised concerns over whether they would meet UC criteria. In contrast, the recommendation to grow their earnings did not feel relevant to gig economy workers. 

I’m not sure that any of us on benefits would particularly wish to be there. For me, it was a safety net when I became, overnight, a single mum.

Working and Child Tax Credit claimant 

Tweaking the language about ‘being reliant on benefits’ and using more widely relevant steps to grow earnings would increase appeal.

Monthly reporting

Monthly reporting felt like a big ask of participants’ time.

Monthly reporting on income and expenses

As a self-employed person, you will need to report your income and expenses once a month, even if you have not earned any money.

This is used to calculate your payment.

Source: Phase 2 qualitative research stimulus 

Participants’ concerns about monthly reporting were that it was a big change from annual reporting under tax credits. Those who found annual reporting challenging were particularly concerned about this. Participants expected that monthly reporting would mean more time away from working and therefore generating income or growing the business. Those with lots of outgoings were most likely to feel that monthly reporting would take a lot of additional time to manage.  

Amongst the small minority who saw benefits to monthly reporting, this was seen in contrast to help save time by completing the submission little and often rather than one big annual submission. A minority also felt that it could get them in to better habits in managing their accounts and finance. 

My expenses and things are really complicated because I’ve got a lot of expenses. It’s like the whole cost of the building, the staff, and everything, it’s just really complicated.

Working and Child Tax Credit claimant 

I think it would probably teach people to do their accounts on time more, and not leave it until the last minute. 

Child tax credit claimant 

Reassurance that support will be available to help participants transition to monthly reporting could help ease these concerns. 

Monthly payments 

Moving to monthly payments was not a major concern for this group.

Receive payments monthly

Universal Credit is assessed and paid on a monthly basis and in a single payment.

After the first payment, you’ll be paid on the same date of every month.

Source: Phase 2 qualitative research stimulus 

Most felt confident about moving to monthly payments. Some were already on four-weekly payments for their tax credits. It was felt that in some ways monthly payments would be easier to manage, as a lot of their other outgoings were monthly. 

Amongst the minority who were concerned about moving to monthly payments, their main worry was around monthly budgeting. They would need reassurance and signposting to support with budgeting. This messaging also prompted questions about a transfer period and whether there would be a time when they had to go without payment. 

I would imagine the first month could be tricky for some people, but I think if you know it’s coming you can budget or make arrangements, or contingency, or whatever it is you need to do. 

Working and Child Tax Credit claimant 

Fluctuating earnings 

Fluctuating earnings also did not present a serious concern, it was even seen as a fairer system by some.

Fluctuating earnings

The amount you earn from self-employment can increase and decrease from month to month.

Universal Credit claimants need to budget and plan for this, as any self-employed person must do.

Source: Phase 2 qualitative research stimulus 

This message did not present a serious concern. The recognition that earnings through self-employment can vary month to month was welcomed. Participants all felt they already budgeted and planned for fluctuating earnings. If a claimant’s income varies a lot year to year, this system felt fairer and preferable to annual calculations as it meant there was no chance of being overpaid, as with tax credits. 

I’m generally pretty good with budgeting anyway. I can try and make money last if I get large amounts, and like I say, I’ve been on a fairly low income, but I’ve managed to make it last. I’ve managed to get everything I need; food, toiletries, that sort of thing.

Working tax credit claimant 

“Gainful self-employment” definition 

The messaging makes it clear how gainful self-employment is worked out. Few expressed concerns about their existing self-employment not being classified as such.

Understanding your self-employment

Self-employed claimants attend an interview with a work coach, who considers if they are gainfully self-employed.

This means self-employment is your main job or main source of income, you get regular work from self-employment, your work is organised – this means you have invoices and receipts, or accounts – and you expect to make a profit.

Source: Phase 2 qualitative research stimulus 

The language was easy to understand, and participants were able to work out if they would be considered gainfully self-employed. However, the small minority who had a job as an employee as well were unsure about what would happen if their ‘main job’ was as an employee rather than self-employed. 

The ‘interview’ with the work coach raised questions about their experience and ability to understand their business. Those who had engaged with the legacy benefits system before were more likely to have negative memories of the work coach. Attending the interview was also seen by some as more time away from working, so the importance and benefits of this would need to be clearly identified. 

I think it is also dependent on whether the work coach is sector specific. You can be self-employed as an accountant, that’s very different from being self-employed as either a quilter or a metal fabricator.

Working and Child Tax Credit claimant 

Avoiding the term ‘interview’ may make the process feel less daunting. More clarity for those who are self-employed and employed will help this group see the relevance for them. 

Conditions of gainful self-employment 

The conditions of gainful self-employment did not come as a surprise to participants.

Gainfully self-employed

Claimants who are found gainfully self-employed during the gateway interview are exempt from job search requirements so they can focus on growing their self-employment.

Source: Phase 2 qualitative research stimulus 

For the most part, participants felt that this definition of gainful self-employment aligned with their expectations. However, there was concern amongst those who did not feel able to grow their self-employed work due to limitations caused by childcare or caring responsibilities or a preference to sustain their business rather than grow it. Participants also expressed concerns about unpredictable or unexpected costs affecting their ability to successfully grow their business. 

You hope to make a profit, you hope your business is going to be successful, but sometimes it’s not because you’re either not well enough to work or you don’t get paid. Or, your outlay for running your business, the costs of those things suddenly go up, or something unexpected comes up that you then have to pay out for. So, there’s lots of reasons why you may not make a profit in a particular period of time

Working tax credit claimant 

Conditions of non-gainful self-employment 

Similarly, the conditions of non-gainful self-employment were understood and unsurprising.

Not gainfully self-employed

Claimants who are found not gainfully self-employed are required to meet work-search conditions, where applicable.

They must still report any self-employed earnings each month, even if they are zero.

Source: Phase 2 qualitative research stimulus 

The language was clear and well understood. It was seen as fair that someone who is not gainfully self-employed would need to find other means of income, it was seen as unrealistic to expect otherwise of the government. 

There were still some questions about what the requirements would be if they are mainly employed and self-employed on the side. More clarity for those who are self-employed and employed will help. 

When they say, ‘Are you self-employed when you’re a gig economy worker?’ You’re not trying to build a business in a sense, but you are self-employed. There’s maybe another distinction in there.

Working tax credit claimant 

Quarterly meetings 

The purpose of the quarterly meetings was easily misunderstood and could be off-putting.

Start-up period

If you are gainfully self-employed, in your first year you are required to attend quarterly meetings with your work coach.

You will discuss the steps you are taking to grow your earnings from your self-employment.

During this year, the amount of Universal Credit you receive is based on your actual earnings, and may go up and down.

Source: Phase 2 qualitative research stimulus 

Participants thought the quarterly work coach meetings would be with someone who would try to give business advice. The usefulness of this sort of meeting was widely questioned as participants doubted that anyone could fully understand their unique situation that quickly. It was not clear that the meeting will be used to check that they are taking steps to grow. 

The meeting was therefore seen as off-putting. Quarterly did not feel like a long time to achieve growth and it meant time away from work. The term “Start-up period” could be confusing. It did not feel relevant to this audience who were already self-employed. Its relevance became clearer once the Minimum Income Floor (MIF) had been understood. More clarity on the purpose of the quarterly meetings will avoid cynicism around its usefulness 

Three months, you might have only managed to fulfil a couple of jobs, if they were big or whatever, and not really evolved in any way. You might just be saying hello to your coach. 

Working tax credit claimant 

Minimum Income Floor 

Participants were confused and uncertain around how the Minimum Income Floor is calculated.

Minimum income floor

Once your start up period has ended, it will be assumed you will be earning at least the same amount as someone like you who is in paid work.

This will usually be the number of hours you are expected to work or look for work, multiplied by the National Minimum Wage.

This amount is called the minimum income floor.

If you earn less than the minimum income floor, Universal Credit will not make up the difference.

We will use the minimum income floor to work out your Universal Credit payment instead of your actual earnings.

Source: Phase 2 qualitative research stimulus 

The wording was unclear. ‘Someone like you’ was frequently misunderstood as someone in the same profession rather than similar life situation, that is another house-cleaner rather than another single parent. This caused serious concerns about whether they will be able to meet the MIF after one year. 

Once the meaning of ‘someone like you’ was explained, participants wanted to know the specific amount that they would need to earn to exceed the MIF. This would give them a sense of where they currently stand and how close to the MIF they were. One year did not feel long enough to see a marked increase in income. Making it clear that ‘someone like you’ means someone in a similar life situation to you will make this message clearer. 

It can take a few years before your business is actually thriving and you just don’t know. I don’t know how much Universal Credit would be giving [to support that].

Working tax credit claimant 

Attending appointments 

Participants wanted clarity on how these appointments would take place.

Attending appointments

It’s important you attend your appointments. You will be given details of your appointment before it is due to take place.

If you are unable to attend, you must tell us as soon as possible.

Source: Phase 2 qualitative research stimulus 

The requirement to attend appointments was not a surprise to participants. Their main concern was around how appointments would fit around work and other commitments and where they would take place (online, over the phone, or in person at a Jobcentre Plus office). In person was the least desirable, as it would take the longest, particularly for those who live far away from a Jobcentre Plus office. 

Questions were raised about appointment scheduling and flexibility, such as whether participants would be able to choose the time and date of the appointments or change the time once it is booked if something comes up such as work or childcare. Participants want to feel able to have a say on how and when these appointments take place. 

I think it would be a terrible idea if you would have to physically go somewhere. Especially if it’s a job where you have to clear up tools, and set everything down and then come back and set everything back up again, because sometimes it’s the set up and set down, clear down that takes the time. 

Working tax credit claimant 

Receiving payments on time 

Receiving payments on time was the same as tax credits and so did not feel noteworthy to participants.

Receiving your payment on time

It is important to report your self-employed income and expenses correctly and on time each month.

If you report late, your Universal Credit payment may be delayed.

Source: Phase 2 qualitative research stimulus 

This is what was expected. It was how tax credits worked. 

Reporting changes in circumstances 

Likewise, reporting changes was the same as tax credits and so did not feel noteworthy.

Reporting changes in your circumstances

You’ll need to report any change in circumstances, for example, if you close your business, start a different kind of business, take a permanent job, or are no longer able to work.

You can report these changes in your online account.

Source: Phase 2 qualitative research stimulus 

This is what was expected. It was how tax credits worked, so no one felt worried or stressed by this. 

Advances 

The implication of a period without payment was concerning and more clarity was wanted on how repayment will work.

Advances are available

If you are new to Universal Credit and unable to manage until your first scheduled payment, you may be able to get an advance to see you through.

Source: Phase 2 qualitative research stimulus 

Although the advances were appreciated, the implication that people claiming UC would need an advance was concerning. Debt aversion was common amongst this audience. There was therefore uncertainty about how willing they would be to accept an advance without more details about how it would work in practice, such as how long they would be repaying it for and how much DWP would take out of monthly payments for repayments. Participants needed more information about the terms of the advance before this offer can resonate. 

The media would imply that not everybody has had success in getting that advance and that it has actually taken some time to set up Universal Credit and that would be why the Food Bank queues have been particularly bad.

Working and Child Tax Credit claimant 

Online, telephone and in-person support 

Online and telephone support was appreciated, but past experiences shaped participants’ expectations of effectiveness.

Online, telephone and in person support

Universal Credit is an online service. Once you have applied, you can manage your account, complete tasks, view journal messages, and message your work coach at a time to suit you and your work. *

If you would prefer to speak to someone, you can contact the Universal Credit helpline, Monday to Friday, 8am to 6pm. Alternatively, you can visit your local Jobcentre.

*Messages will be picked up by work coaches during office hours.

Source: Phase 2 qualitative research stimulus 

All participants felt confident completing tasks online, meaning options for both online and telephone support were welcomed. Online support was particularly welcomed, as this is more flexible and does not involve long waiting times. A suggestion of typical reply times for online support would be welcomed, as it would help to further clarify this. 

Past experiences of seeking support from HMRC for tax credits and experiencing long waiting times and being passed around different teams meant participants were not confident about accessing telephone support quickly. 

For me, virtual support would be better because I don’t get out very often and it’s difficult for me to get anywhere without help, so I tend to do most things online. 

Working and Child Tax Credit claimant

Universal Credit: Impact of messages on perception and willingness to move 

When self-employed participants had a greater understanding of how UC works, they were more reluctant to move to UC. They felt that UC would require more time than tax credits to report income and expenses monthly and that Work Coach meetings would mean time away from generating an income and from other responsibilities like childcare. 

There was misunderstanding and scepticism about the usefulness of the Work Coach meetings, which meant the time investment for them was less likely to feel valuable.  

Participants were concerned about the introduction of the MIF after one year of claiming UC, particularly given uncertainty about what the amount is set at. Messaging around this was the biggest cause for concern. Participants were used to the status quo and there were those who felt unable to grow their business or increase their existing income. 

The main areas of concern around the MIF were: 

• it will not be calculated fairly as ‘someone like you’ was misinterpreted to mean someone else in their industry not their life situation 

• they do not know exactly what the MIF is which created uncertainty 

• a year will not be long enough to reach the MIF amount as it can feel like a very short period of time 

More clarity around how the MIF will be calculated and what it is likely to be set at, as well as case studies of different types of claimants’ first year on UC, could help to address these concerns. 

The main area of concern around monthly reporting of income and expenses was why the system was being changed from how tax credits works when it was seen to work well for participants. They felt that the stress they experienced doing their annual reporting would then be repeated monthly. Participants found it hard to imagine monthly reporting being easier than annual reporting. It was therefore seen as time away from working, making money, growing the business and other responsibilities such as childcare. Signposting to support with reporting could help address these concerns, as could drawing out similarities between tax credits and UC reporting.

Conclusions 

Across both phases, self-employed participants lacked awareness and knowledge of UC, leading to negative or indifferent perceptions of the benefit. 

Ingrained behaviours and attitudes towards claiming and self-employment could mean that any form of change is inherently seen as negative. 

Experiences of being self-employed were not universal, which had a significant effect on how messages were received and their impact on shifting perceptions. 

None of the messages tested were perceived to be highly motivating or reassuring towards claiming UC. Conversely, a number of messages served to compound already held negative perceptions and concerns.

Appendix: Phase 1 Stimulus Materials

• you can apply for Universal Credit if you are working or self-employed on a low income, or if you are unemployed. It replaces a number of legacy benefits including Working Tax Credits and Child Tax Credit

• you can make your Universal Credit claim online and payments are made on a monthly basis if you are eligible

• you will meet with a work coach who can provide support and advice if you are preparing for work, moving into work or looking to increase your earnings. Work coaches also support those who are self-employed, grow their business

• if you are self-employed, you are eligible for the childcare offer (up to 85% of childcare costs) as long as you are earning

• in return for receiving Universal Credit, you will be subject to the Minimum Income Floor (MIF). This means you are treated as earning a certain amount (the National Minimum Wage for someone your age, working 35 hours per week unless you have other responsibilities such as childcare). For the first 12 months on your self-employment, the MIF will not be applied, to give you chance to grow your business

Automatic adjustment

• for many who are self-employed, particularly those with seasonal businesses, earnings often fluctuate from month to month, and they need to budget and plan for this. Self-employed Universal Credit claimants are no different in this regard. The time when the claimant has lower earnings is regarded as being part of their self-employment business cycle, and the claimant should factor this into their planning

• this means that the claimant should:

  • put earnings aside to cover this period
  • expand their business during this time
  • potentially explore other areas of employment