Research and analysis

Understanding customer notification of qualifying disability benefits in tax credits

Published 26 January 2023

Understanding Customer Notification of Qualifying Disability Benefits in Tax Credits

HM Revenue and Customs

Research Report 685

January 2023

IFF Research

The views in this report are the author’s own and do not necessarily reflect those of HM Revenue and Customs.

© King’s Printer and Controller of HMSO 2023 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. Published by HM Revenue and Customs, January 2023

0.1 Glossary

Annual Review	Annual review of claimants’ tax credits claim. Claimants are sent a ‘renewal pack’ which instructs them on how to renew their claim and check that their details are correct. If anything has changed in the claimants’ circumstances, they must report this to HMRC.
Child Tax Credit (CTC)	A means-tested benefit administered by HMRC for individuals responsible for at least one child or young person. Income, the number of children, and whether any of the children are disabled can determine how much a claimant can receive.
Department for Work and Pensions (DWP)	The government department responsible for welfare, pensions and child maintenance policy. DWP administers benefits such as Disability Living Allowance and Personal Independence Payment.
Disability element of Child Tax Credit	Additional support on top of the basic CTC payment for individuals who are responsible for a disabled child. To qualify the child must either be registered blind or in receipt of a qualifying sickness or disability benefit. Depending on the qualifying sickness or disability benefit, the claimant may be entitled to the ‘severe disability element’, which is a higher payment.
Disability element of Working Tax Credit	Additional support on top of the basic WTC payment for people with a disability who are working. To qualify a claimant must work at least 16 hours per week, have a disability, and meet the qualifying benefits test. A person doesn’t have to currently be in receipt of a disability benefit – in some cases they can rely on previous receipt of a disability benefit. Depending on the qualifying sickness or disability benefit, the claimant may be entitled to the ‘severe disability element’, which is a higher payment.
Disability Living Allowance (DLA)	A benefit administered by DWP that is paid tax-free to disabled people to help with the cost of mobility and care. The amount received is determined by the level of help that is needed. This benefit is gradually being replaced by PIP and new claims cannot be made for DLA.
Personal Independence Payment (PIP)	A benefit administered by DWP to support with extra living costs if an individual has both: a long-term physical or mental health condition or disability; and difficulty doing certain everyday tasks or getting around because of their condition. It is replacing DLA.
Qualifying disability benefit or sickness	To be eligible for the disability element of tax credits a person must work at least 16 hours per week, be at a disadvantage in getting a job, and meet the qualifying benefits test. A person doesn’t have to currently be in receipt of a disability benefit – in some cases they can rely on previous receipt of a disability benefit.
TC956 Disability Helplist	A guide to the conditions that a claimant must meet in order to qualify for the disability element of tax credits.
Universal Credit	A means-tested benefit administered by DWP to support people on low income or who are unemployed. It is gradually replacing other benefits, including WTC and CTC.
Working Tax Credit (WTC)	A means-tested benefit administered by HMRC for working people on low income. Individual circumstances such as the number of hours worked, whether a claimant is disabled and whether they pay for childcare determines how much a claimant can receive.

1. Executive Summary

1.1 Introduction, background and method

Claimants entitled to a disability element of Working Tax Credit (WTC) and/or Child Tax Credit (CTC) should notify HM Revenue and Customs (HMRC) when they begin to receive, or stop receiving, a qualifying disability benefit from the Department for Work and Pensions (DWP). This enables HMRC to appropriately adjust tax credit claims to reflect these changes. HMRC conducted analysis which indicated that some claimants were confused about rules and responsibilities regarding notification of changes, in relation to the disability element of their claim. HMRC commissioned this research to provide insights on the possible barriers which prevent claimants from notifying HMRC of changes. The research also focused on system or communication changes to help HMRC better support and communicate with claimants about their reporting responsibilities in the future.

The research was conducted in 2 phases. Phase 1 focused on claimant understanding of the system, possible reasons for not notifying HMRC of changes, and communication ideas for the future. 31 interviews were conducted between March 2022 and April 2022. Phase 2 focused on testing 3 communications to see if they would support claimant understanding and the reporting of changes of circumstance in regard to the disability element of their claim. 5 mini focus groups (3 WTC and 2 CTC) and 7 depth interviews were conducted in June 2022.

1.2 Key findings

The key findings for the research are outlined below and have been organised under each of the 3 main chapters of the report.

Claimant awareness and understanding of the eligibility criteria for the disability element of tax credits and their responsibilities to report changes

Overall, at Phase 1 claimants had good awareness of the eligibility criteria for the disability element of their tax credit claim, although they did struggle at times to recall the exact conditions for claiming. Those who claimed the disability element of CTC tended to be more familiar with the conditions than those claiming the disability element of WTC. Most WTC claimants had good awareness and understanding of the conditions, but some reported uncertainty around one or more of the conditions.

Evidence at Phase 2 indicated that further guidance or information on the following would be beneficial to help claimants understand the eligibility criteria for the disability element:

1. confirm whether claimants should tell HMRC if they are appealing a DWP decision in relation to their qualifying sickness or disability benefit

2. confirm whether there is an upper limit for working hours when claiming the disability element of WTC

3. guidance about when eligibility for the disability element of WTC may stop, for example due to illness which means they cannot meet the 16-hour minimum, or if the impact of their disability on their work fluctuates

4. guidance about the eligibility criteria for claimants with neurodivergent or mental health conditions

Most claimants felt that they would report any changes of circumstance to HMRC. However, this decision seemed to be based on anxiety about getting things wrong and receiving an overpayment, rather than claimants being clear about their notification and claim management responsibilities.

There was a significant amount of confusion among claimants at Phase 1 about the roles of HMRC and DWP. Some struggled to understand their responsibilities for reporting changes to both departments.

Barriers to claimants notifying HMRC of changes in relation to the disability element of their claim

Claimants were not clear on some of the finer details of the eligibility criteria. If they were unsure about whether they needed to report a change, most would tend to be cautious and notify HMRC.

Some claimants were unsure as to whether they should report a change when it happened, or just once a year during the Annual Review period.

During both phases of the research claimants raised their disabilities and health conditions as a possible barrier to reporting. Fluctuating physical or mental health conditions may make it difficult for claimants to perform basic tasks, such as answering questions over the phone. Hospitalisation could be a barrier. If an individual’s or child’s condition had deteriorated to the extent that they had been hospitalised for 28 days, it was unlikely that the individual or parent would have the emotional or physical capacity to report this change.

The one-month window to report changes of circumstances was raised by claimants at Phase 2 as a possible barrier to notifying changes. This timeframe may not be long enough for individuals to identify and acknowledge a change or decline in their health. Once they identify this change, they may struggle to report this to HMRC due to the decline in their health.

Most claimants had experienced a barrier when contacting HMRC through the tax credit helpline. Most had experienced long wait times and some felt that the helpline advisers had not undergone disability training.

Most claimants understood that DWP and HMRC were separate, but some struggled to grasp that they would need to report changes to their circumstances to both.

There was a feeling at Phase 1 that a small minority of claimants may intentionally avoid or delay reporting a change which could impact their eligibility for the disability element. Claimants suggested that individuals may do this to prevent losing part of their tax credit award. At Phase 2 claimants discussed the potential move to Universal Credit and how concerns about the transfer may prevent them from notifying HMRC of changes.

What system or communication changes could improve reporting rates of individuals claiming the disability element of tax credits?

In Phase 2, claimants were shown 3 communications: a disability element eligibility letter from HMRC, the “Report changes that affect your tax credits” GOV.UK webpage and a checklist about who can claim the disability element of tax credits.

Claimants welcomed the idea of HMRC reaching out and informing individuals they may be eligible for the disability element of tax credits via letter. However, they commented that the tone of the letter could be more positive and should explicitly state that they may be eligible for additional support. Some claimants were confused by what they saw as vague language in the letter.

Most claimants were familiar with the “Report changes that affect your tax credits” GOV.UK webpage. They often found it difficult to find specific information on the disability element. Clear distinct sections on WTC, CTC and the disability element would help claimants to find information more easily.

The checklist format was well liked, as it enabled claimants to easily tick the elements which applied to them. Claimants felt that it would be most helpful for those claiming for the first time. Claimants liked the layout and the images in the checklist. However, those claiming the disability element of WTC felt the cross-referencing between the pages was not helpful. Claimants felt the checklist would be easier to digest if the information for WTC and CTC was separated. Providing the information online would help to address both issues as the checklist would route individuals to the relevant information. However, claimants did feel it was important to have a paper version as well.

Both phases of the research highlighted communication and system changes which could support disability element claimants to report changes. Those claiming the disability element of WTC felt that more choice and flexibility in how they are able to report would help them to manage their claim.

Findings from Phase 1 revealed that most claimants preferred personalised, written communications from HMRC. Most preferred communications via post, however others felt email would be more convenient and environmentally friendly.

2. Introduction, background and method

This chapter provides the background and context to the research. It also provides an overview of the research methodology.

2.1 Background and context

Child Tax Credit (CTC) and Working Tax Credit (WTC) were introduced in April 2003. They are flexible systems of financial support designed to be scaled up or down depending on needs and circumstances. They are part of wider government policy to provide support to parents returning to work, reduce child poverty and increase financial support for all families. Entitlement is based on age, income, hours worked, number and age of children, childcare costs and disabilities. Entitlements will therefore change depending on changes to household circumstances. There are 1.43 million families who are in receipt of tax credits. Of these claimants, 66,400 are receiving the disabled worker element and 146,900 children are receiving the disabled child element. One of the main ways in which tax credit claimants become eligible for the disability element is by also receiving a separate disability benefit.

Tax credits claimants who are entitled to a disability element of WTC and/or CTC should notify HMRC when they begin to receive, or stop receiving, a qualifying disability benefit administered by DWP. This is so the relevant tax credits disability elements can be applied, changed or removed from their tax credit claim. However, HMRC are aware from the analysis of a small number of calls in 2018 that some tax credits claimants are confused about the rules and their responsibilities regarding notification. Therefore, this research was commissioned to provide evidence on the possible barriers to notification to enable HMRC to better support and communicate with claimants about their reporting responsibilities.

In July 2021 the government published the National Disability Strategy. It set out actions to be taken to improve the lives of all disabled adults and children, which included improving access to disability benefits. HMRC along with other government departments are committed to simplifying processes and improving signposting, so that disabled individuals can more easily navigate their way through the benefit system.

2.2 Research objectives

The aim of the research was to understand why claimants do not inform HMRC of changes that impact their eligibility for disability benefits. It also explored potential improvements to the tax credits service to help customers better understand and fulfil their obligations. More specifically, the aims of this research were to provide insight into the following:

• the extent to which claimants understand the relationship between qualifying disability benefits and the disability element of tax credits (including the distinction between a benefit being received versus being paid)

• whether individuals understand their obligation to inform HMRC of changes in their disability benefits

• what reasons claimants may have for not reporting these changes (including if there is an assumption that they do not need to provide information to both HMRC and DWP)

• any procedural barriers to reporting changes in disability status and how they could be addressed for example incentives or process changes

• what ‘nudges’ might help support HMRC’s strategy to proactively tackle fraud and error through education, targeted communications and nudge campaigns, as well as the timing at which these might best be deployed

2.3 Methodology

The research involved 2 stages of data collection. Phase 1 of the research took place between March 2022 and April 2022 and Phase 2 took place in June 2022. Phase 1 involved depth interviews with WTC and CTC claimants. Phase 2 involved mini focus groups and depth interviews with WTC and CTC claimants.

Phase 1

Phase 1 of the research focused on claimant understanding of the tax credit system, possible reasons for not reporting changes of circumstances in relation to the disability element of their claim and communication ideas for the future. To aid the discussion around understanding of the eligibility criteria and when a change of circumstance in relation to the disability element should be reported, an example renewal letter and six scenarios were included as stimulus during the interviews. The 6 scenarios of fictional claimants experiencing a change of circumstances which would impact their eligibility for the disability element of tax credits were jointly created with HMRC. 2 scenarios were randomly assigned and discussed within each interview.

31 interviews were conducted at Phase 1. See Table 2.1 for further details.

Table 2.1 Phase 1 completed interviews

Benefit type	WTC only	CTC only	WTC and CTC	Total
Disability element relates to adult	17	N/A	5	22
Disability element relates to child	N/A	5	4	9

Phase 2

Phase 2 focused on testing specific communications to see if they would support claimant understanding and reporting of changes of circumstance regarding the disability element of their claim. 3 communications were tested during Phase 2: a disability element eligibility letter, reporting changes that affect your tax credits GOV.UK webpage and a checklist on who can claim the disability element of tax credits.

The disability element eligibility letter informed individuals that HMRC had received information from DWP that they or their child may be eligible to claim the disability element of tax credits. The letter contained information on the eligibility criteria for the disability element and severe disability element of WTC and CTC. The letter was tailored to those possibly eligible for WTC or CTC. The relevant version of the letter was shown to current claimants for example, those currently claiming WTC were shown the WTC eligibility letter.

The ‘report changes that affect your tax credits’ GOV.UK webpage focuses on changes which should be reported to HMRC. The pages include changes in relation WTC, CTC and the disability element of tax credits. All the content was shown to all claimants.

The checklist on who can claim the disability element of tax credits was created by IFF Research as an easy read version of the TC956 Tax credits: disability helpsheet. The checklist had 2 main sections, one focused on WTC and the other on CTC. Claimants were shown the whole leaflet, but most of the discussion was focused on the section relevant to their claim.

5 mini focus groups (3 WTC and 2 CTC) and 7 depth interviews were conducted at Phase 2. Further details can be found in Table 2.2.

Table 2.2 Phase 2 breakdown of individuals spoken to

Benefit type	WTC	CTC	Total
Number of individuals spoken to	25	8	34

2.4 Reading this report

This report is based on a thematic structure and therefore both stages of the research are discussed together (where relevant) throughout the report.

The data included in this report is qualitative. Qualitative analysis is intended to understand individual attitudes, circumstances, and behaviours in detail, rather than to be ‘representative’ or to measure the incidence of these attitudes or behaviours in the wider population. When describing the findings, we use terms such as ‘most’, ‘many’, ‘some’ or ‘few’ to give a relative indication of the extent to which views were expressed. The terms ‘many’ or ‘most’ are used to mean that a view is fairly common while, at the other extreme, ‘few’ indicates that a finding applied only to a handful of claimants. ‘Some’ is used to indicate a middle ground between ‘many’ or ‘most’ and ‘few.’

3. Claimant awareness and understanding of the eligibility criteria for the disability element of tax credits and their responsibilities to report changes

This chapter explores claimants’ awareness of the eligibility criteria for claiming the disability element of tax credits, as well as their understanding of the criteria. It looks at what information and support is currently accessed to understand eligibility and what further information would be useful to claimants. Finally, it explores claimants’ understanding of their responsibility to report changes.

3.1 Claimant awareness and understanding of eligibility

During the Phase 1 interviews claimants were shown the eligibility criteria for the basic disability element of tax credits. Claimants were then asked how aware they were of the conditions and whether they felt the information was clear. The information did not include details on the severe disability element.

Overall, claimants at Phase 1 had good awareness of the eligibility criteria for the disability element of their tax credit claim. Although claimants struggled to spontaneously recall the exact conditions for claiming the disability element of WTC or CTC, most said they had some familiarity with the conditions when they were shown a list. Typically, claimants said they had only engaged with the eligibility criteria for the disability element when they had first made a claim for it. Some claimants reported that they had never seen a list of the eligibility criteria, but were familiar with the conditions from conversations with the tax credit helpline when they first made their claim.

Those who claimed the disability element of CTC tended to be more familiar and clearer about the conditions for their claim than those claiming the disability element of WTC. CTC disability element claimants felt that the conditions for claiming were clear and easy to understand.

Individuals claiming the disability element of WTC knew they needed to be in work, but some were not aware that they needed to work a minimum of 16 hours per week. These claimants were either not aware of the minimum or assumed they needed to work a greater number of hours to be eligible. A few claimants questioned whether there may be a maximum number of hours and expressed concern that they may have exceeded this.

Most claimants were aware that their individual/own eligibility was based on their claim for a sickness or disability benefit, for which they had had an assessment when making a claim with DWP. However, some did not understand if, or how, HMRC would assess whether they had a disability which put them at a disadvantage in getting a job, or why it was separate from the condition of claiming a qualifying sickness or disability benefit.

A further area of confusion about the condition of being at a disadvantage in getting a job, was that some claimants did not understand how or why this related to being able to claim an in-work benefit. They were aware that the main basis for eligibility was being in work so the condition of finding it difficult to get a job felt counterintuitive. Instead, these claimants thought, it may make more sense to include a condition on facing barriers with working or with working full time.

While claimants were aware that their eligibility for claiming the disability element of WTC was linked to their claim for another benefit, the phrasing for this condition caused confusion for some. The wording ‘qualifying sickness or disability benefit’ read to some claimants as separate types of eligibility. These claimants questioned if there was a list of qualifying sicknesses, and how this would be managed by HMRC.

"I've never seen these…qualifying sickness, that can be a bit misconstrued because people will always question well what is a qualifying sickness? You would then have to have a list of qualifying sicknesses.”

WTC claimant interview, 38, female

At Phase 2 of the research, the letter claimants were shown included details on the eligibility criteria for the severe disability element. The distinction between the disability element and severe disability element was new to many claiming the disability element of WTC. When they heard about the severe disability element, claimants were unsure about whether this would be awarded separately, or on top of, the disability element.

“Are you saying that disability element is one payment, and the severe disability is a higher payment?”

WTC claimant group, 52, male

3.2 Key information and support sources claimants turn to for guidance

During Phase 1 discussions, claimants were asked about information sources they turn to for guidance on the disability element of their tax credit claim. GOV.UK was the main source of information used by claimants, who believed the information would be accurate, thorough, and up to date. Some claimants said they were comfortable navigating the HMRC pages of GOV.UK to find information. Others said they tended to use search engines to do this and would select the GOV.UK option in the search results as a starting point.

"I would just Google WTC information or I might just put in tax credits and go onto the Government site and look things up there".

WTC claimant interview, 46, male

Claimants who were not confident they had found the correct information on GOV.UK tended to cross-check information on other websites. Forum sites such as Money Saving Expert and Mumsnet were felt to be useful and easy to understand sources of information. Although they were seen as useful, claimants did not think these forums were reliable sources of information, so they tended not to base their entire understanding from forum content alone.

The tax credit helpline was also a key source of information about the disability element. It was the first port of call for claimants who lacked confidence with finding or understanding information online without additional support. It was also the main source of guidance used by claimants who had looked at information online but felt uncertain about their understanding of this, or of how to apply the information to their circumstances. Some claimants felt that the scenarios used on GOV.UK did not apply to their situation, or felt that their circumstances were more complex than those included in the standard scenarios. They wanted tailored, personalised advice about their claim.

“You can get better information for your exact circumstances, because some places you go, you've got fixed scenarios, of what to do, but sometimes you’ve got a little tweak in your circumstances.”

WTC and CTC claimant interview, 35, male

However, not all claimants reported positive experiences of the tax credits helpline. Long waiting times to speak with a helpline adviser was a common complaint. Some claimants also felt that helpline advisers did not always know enough about the disability element of tax credits to be able to answer their questions with the level of detail or certainty that they were looking for. Some also felt that the adviser they spoke with was not as professional as they would expect.

"Usually, you put the phone down feeling pretty [annoyed] to be honest. I've been on the phone all that time and I'm none the wiser."

WTC claimant interview, 69, female

Other sources of information used for guidance with claiming or managing the disability element of tax credits included:

• a recent HMRC letter or guidance letter, relating to the disability element

• Citizens Advice

• Jobcentre Plus

• friends and family

• disability or health condition groups on social media

3.3 Further information claimants would find helpful on the disability element

Findings from Phase 2 of the research indicated that further information and guidance on the following aspects of the disability element eligibility criteria would be helpful for many claimants, as these elements were not well understood:

• guidance about when eligibility for the disability element of WTC may stop, for example due to illness which means they cannot meet the 16-hour minimum or if the impact of their disability on their work fluctuates

• guidance about the eligibility criteria for claiming the disability element for claimants with neurodiverse or mental health conditions

3.4 Claimant understanding of their responsibilities to report changes

During Phase 1 interviews, claimants were shown an Annual Review letter for a fictional claimant and several scenarios containing a change of circumstance which impacted their eligibility for the disability element of tax credits.

Claimants were aware of the Annual Review process and understood they should check their details and inform HMRC if there were any inaccuracies. Claimants said they wanted to ensure they got things right, so they would continue to receive their tax credits award and not receive an overpayment. However, there was uncertainty around what exactly they were meant to do. Most said they simply skimmed the Annual Review letter, checking that their personal details were correct. After completing their first review, claimants did not tend to read the instructions from HMRC. This meant that some did not contact HMRC to confirm that their details were correct, even though the review letter instructed them to do so.

"I've read it so many times, a lot of this stuff is just spiel…I'd just skim bits like that, look for numbers, digits, dates and things like that.”

WTC claimant interview, 33, male

There was high awareness that inaccuracies in personal circumstances included in the Annual Review letter should be reported to HMRC as part of their Annual Review. But for changes during the award period, some claimants were uncertain around whether they should update HMRC as soon as the change occurred or just wait for the Annual Review to do this. This uncertainty led to most deciding it was best to report a change as soon as possible to prevent any issues with their claim, but some said they may wait for the Annual Review if the change happened towards the end of the award period.

“Someone may not know, like if someone registered 11 months ago and then thinks, 'well, I'll get a letter in a month, I will let them know then’.”

WTC and CTC claimant interview 35, male

When discussing the scenarios about what changes claimants should report to HMRC, claimants were aware that changes to their or their child’s qualifying sickness or disability benefit, and for those claiming WTC, changes to work, may impact their eligibility for the disability element. However, this did not mean that all felt that a claimant would necessarily report these changes to HMRC.

For individuals claiming the disability element of WTC, there was a good understanding that changes to the following personal circumstances could affect their claim:

• how much the claimant earns from work

• how many hours the claimant works per week

• eligibility for a qualifying sickness or disability benefit

• temporary or permanent changes to their level of entitlement for their qualifying sickness or disability benefit

Claimants who were claiming the disability element of CTC were also aware that changes to their child’s circumstances could affect their eligibility. Potential changes discussed included:

• their child’s eligibility for a qualifying sickness or disability benefit

• their child leaving full time education

• any other benefits claimed by their child, for example Universal Credit

Most claimants would report any changes to HMRC to avoid receiving an overpayment. This seemed to be based on anxiety about getting things wrong, rather than being clear about responsibilities.

3.5 Claimant understanding of the roles of HMRC and DWP and whether the departments communicate

In Phase 1 of the research there was a significant amount of uncertainty and confusion among some claimants about the roles of HMRC and DWP in administering benefits and tax credits. While most claimants were aware that HMRC was responsible for tax credits and DWP was responsible for their or their child’s qualifying sickness or disability benefit, some were not clear on this distinction. This meant that they struggled to understand their responsibility to report changes to both departments. These claimants assumed that if they reported a change to one department, this would be applied to all relevant benefits. Similarly, they assumed that if their qualifying benefit was stopped, then their tax credit claim would update automatically.

Even among claimants who were aware of the differing roles and responsibilities of DWP and HMRC, there were some who thought that the 2 departments would communicate changes to each other. These claimants reasoned that if their disability element claim was dependent on a benefit administered by DWP, that HMRC would be informed of any relevant changes without the need to rely on the claimant to communicate these. Among some claimants, there was a sense that they should not need to take responsibility for this and that HMRC should ensure they have accurate information.

“Don't these departments talk to each other?... Haven't we missed something here, every day we are told how communications are so good and how we should do everything online, and these companies can't even talk to each other?”

WTC claimant interview, 76, male

Some claimants expressed a desire for a more joined up system. They felt that better communication and joint working between government departments would be beneficial to claimants who may struggle to navigate systems, understand their eligibility, and manage their claims. At Phase 2 of the research a claimant mentioned that they had received a letter from HMRC notifying them that they may be eligible for the disability element, as they had made a claim for a qualifying sickness or disability benefit with DWP. They were very happy to receive this letter and felt this was a good example of the system being ‘joined up’.

“That letter was the difference between me claiming it, and not, so I was grateful… It was an example of where the system was joined up.”

WTC claimant interview, 41, female

4. Barriers to claimants notifying HMRC of changes in relation to the disability element of their claim

This chapter explores the reasons why claimants may not report a change of circumstance that may impact the disability element of their claim. The chapter explores each of the barriers in turn and discusses findings from Phase 1 and Phase 2 of the research throughout.

4.1 Lack of understanding

As outlined in the previous chapter, claimants were generally aware of the eligibility criteria for the disability element of tax credits. However, claimants’ understanding was not as clear when it came to the finer details on the criteria or elements of the criteria that were not currently applicable to them. During Phase 1 this lack of clarity became more apparent when claimants were shown the fictional scenarios about possible changes of circumstance. Claimants commonly felt that the fictional individuals should report the change to HMRC because any changes of circumstance should be reported. However, they struggled to articulate why the change experienced would impact the individual’s eligibility for the disability element of their claim. They also acknowledged that the fictional individuals might not report the change because they may not know they needed to. However, claimants wanted to ‘err on the side of caution’ as they were aware that getting it wrong could result in negative consequences such as overpayments.

"Any change in circumstances you need to let [HMRC] know. I always err on the side of caution, even if they don't need to know, in a change of circumstances I would phone them up to say to them and they could say 'that's fine you don't need to worry about that'...even if I wasn't sure...because I wouldn't want an overpayment."

WTC claimant interview, 62, female

Some WTC claimants suggested that small changes such as a slight change in working hours or income could wait until the Annual Review period, as they would be unlikely to have a significant impact on the award. Waiting for the end of the award period was also thought to be tempting for claimants who may be experiencing ill health, as well as those who were unaware that changes could be reported online and who did not want to call the tax credits helpline due to the potential for long waiting times.

"Well yeah because it is so difficult to get through to them so it might not be intentional, and especially for someone that suffers from anxiety.”

WTC and CTC claimant interview, 46, female

4.2 Impact of disability or health condition

At both phases of the research there was evidence that claimants’ disabilities and health conditions could act as a barrier to them reporting changes in relation to the disability element. Some WTC claimants had fluctuating conditions which affected their cognitive function, such as multiple sclerosis, certain types of cancer, or mental health conditions. Some noted that on some days they would be capable and comfortable completing complex forms or answering questions on the phone, but other days they may struggle to perform basic tasks.

A Phase 2 claimant commented that, if she were in a particularly ‘bad place’ with her mental health, she would not have the mental capacity to manage her claim. She admitted avoiding reporting changes would inevitably lead to her feeling more anxious, but she felt it was a scenario she would struggle to avoid due to her health condition. Claimants felt HMRC processes were not adapted to the nature of fluctuating conditions or how conditions may impact claimant abilities to report changes.

“If you’re feeling anxious, or stressed, or sick you can’t phone them up.”

WTC claimant group, 41, female

“It would make me bury my head even further, because I wouldn’t want to deal with it… it would just be a spiral.”

WTC claimant interview, 41, female

A barrier around hospitalisation was also raised by claimants at both phases of the research. It was felt that if an individual’s or child’s condition had deteriorated to the extent that they had been hospitalised for 28 days or more, it was unlikely that the claimant or parent would have the emotional or physical capacity to report the change to HMRC. Claimants felt this expectation from HMRC was unrealistic and they felt it was likely that claimants or parents would not be able to report this change.

“They’ve had a huge amount of emotional pressure. Their daughter or son has had cancer so it may be the last thing on their mind to think about the paperwork.”

CTC claimant interview, 53, female

4.3 Competing priorities

At Phase 1 claimants discussed how reporting changes may not be a priority task or top of mind for claimants. Therefore, a reason for not reporting may simply be that they have forgotten to report the change. Claimants felt this was particularly understandable for those claiming the disability element as they were likely to have additional complexities in their life that other tax credit claimants did not have.

4.4 Deadline to report

The one-month timeframe to report changes was raised in Phase 2 as a barrier for claimants with a disability or health condition. It was suggested that this period of time may not be long enough for claimants to identify a change or decline in their health which may impact their eligibility. Additionally, once they had identified the change it could be a struggle for individuals to report this, especially if it is due to their health declining.

4.5 Methods of reporting

Most claimants at Phase 1 and Phase 2 felt they had experienced barriers when contacting HMRC via the helpline. They had commonly experienced long wait times and some felt that the advisers they had been put through to did not understand their disability or health condition and how this may impact their ability to provide or find information in a timely manner. Whilst claimants commented that the tax credit helpline staff were often friendly, it was suspected they did not have disability training. Claimants felt frustration that there was no dedicated helpline for those claiming the disability element. This difficulty in contacting HMRC via the helpline and the lack of support from advisers was felt to be impacting claimants’ abilities to report changes in relation to the disability element of their claim.

”[I was] on the phone for ages when [I was] really tired… and they asked me the name of my kids, I was so tired I couldn’t remember! You need people you’re talking to who don’t just think you’re mad when you say give me a minute I can’t remember.”

WTC claimant group, 57, female

4.6 The assumption that DWP and HMRC communicate

As mentioned in the previous chapter, there was some confusion amongst claimants in Phase 1 over whether DWP and HMRC communicate. Most understood the departments were separate, but some seemed to be less clear on this distinction. Therefore, claimants struggled to grasp the need to report changes to both departments as they assumed if they contacted one of the departments all their benefits would be updated.

"I would have thought they'd find out. Isn't it all linked? Wouldn't HMRC see that?”

WTC and CTC claimant interview, 39, female

4.7 Deciding not to report

In Phase 1 there was a feeling among some that a claimant may avoid, or delay, reporting a change which could affect their eligibility for the disability element to prevent losing part of their tax credit award. When presented with the fictional scenarios, claimants said that someone may decide not to report temporary changes to HMRC in the hope that it would not be discovered, and their claim would remain unaffected. Temporary changes could be being unable to work or needing to work less for a short time, or if a claimant’s level of entitlement for their qualifying disability benefit changed.

"People get used to having a certain amount of money and therefore might be buying things on credit and don't want to reduce that."

WTC claimant interview, 58, female

At Phase 2 there was an awareness that reporting changes to HMRC could result in a claimant being transitioned to Universal Credit. Claimants were not sure what changes could be a trigger for the transition. They admitted the thought of the transition may discourage them from reporting changes because they were concerned about the impact of being moved onto Universal Credit. Claimants were uncertain about what Universal Credit could mean for them, but they generally believed they would receive less support than under the tax credits system.

“I'm terrified of ending up on Universal Credit, because my memory and my ability to do things on a regular basis is really, you know, impaired. So, if I've got to do my self-employed stuff every week, and what I've spent every week, and if I don't do it on time, I'm going to lose it, I'm going to get sanctioned or whatever else, that massively terrifies me. And I think one of the reasons that [tax credits] is one of the last things I've changed my address on is because that could be one of the things that goes ‘oh you’ve got to be on UC now’… knowing that that could spark a whole new system that I know nothing about, and will have to learn, and will learn about while being penalized, is horrifying.”

WTC claimant group, 41, female

5. What system or communication changes could improve reporting rates of individuals claiming the disability element of tax credits?

This chapter explores claimants’ suggestions for improvements around HMRC communication materials and systems for reporting changes in relation to the disability element of tax credits. It presents findings from Phase 2 of the research which tested 3 communication materials. It then explores how HMRC could implement communication and system changes to encourage claimants to report changes.

5.1 Improvements to current communications

Disability element eligibility letter

In Phase 2 of the research, claimants were shown 2 versions of a letter from HMRC. The letter was based on an existing letter which is sent to claimants if HMRC becomes aware that they have stopped receiving a DWP disability benefit which had entitled them to the disability element of CTC or WTC. The new letter would be sent to claimants if HMRC became aware that a person had started receiving a DWP disability benefit that could make them eligible for the disability element of CTC or WTC. Current tax credit customers claiming the disability element of CTC were shown a version of the letter aimed at parents claiming disability benefits administered by DWP for their children. Claimants in receipt of the disability element of WTC were shown a letter aimed at adults in receipt of disability benefits administered by DWP.

Overall, claimants welcomed the idea of HMRC reaching out and informing individuals that they may be eligible for the disability element of tax credits. They were generally surprised that DWP and HMRC were sharing some information, but they felt this was positive.

Most claimants recalled receiving similarly formatted communications from HMRC and therefore found the letter familiar. However, the first impression of many was that the letter felt ‘overwhelming’, with the amount of information in it being commonly mentioned as contributing to this feeling.

“I don’t like reading loads of information… it’s a bit time consuming and overwhelming.”

CTC claimant interview, 44, female

A few claimants commented on the sense of anxiety that receiving an HMRC letter may generate. This is due to people’s previous experiences of the system, which may put them off actioning the information, or even prevent them from opening the letter. Claimants were fearful of finding out that they owed money to HMRC or that they were losing their tax credits.

A key takeaway was that the overall tone of the letter should be more positive, showing that HMRC are trying to help. Claimants suggested that the letter’s headline should be more specific about what’s being offered. It should emphasise that the purpose of the letter is to provide additional economic support to individuals who are claiming disability benefits for themselves or their children.

Some claimants felt the tone of the letter was too business-like and formal. They would have preferred a more informal tone reflecting the positive message of the letter. For example, changing the main headline of the letter to ‘You [are or may be eligible] for extra support’ could help to address the instant anxiety that some reported upon receiving any communication from HMRC, and encourage claimants to continue reading.

Some claimants were frustrated by the vague language used in the letter around the eligibility for the disability element in sentences such as ‘[you or your partner] may meet one or more of these conditions’ and ‘whether you and/or your partner qualify’. Claimants did not understand why HMRC could not definitively confirm their eligibility for the disability element of tax credits within the letter.

“Surely they should know that you qualify for that disabled element.”

CTC claimant group, 56, female

There was a sense that if their eligibility for the disability element was not clear or certain, it may not be worth their time and energy to apply via the tax credit helpline. Claimants wanted to avoid spending long periods of time on the phone if they were going to be told they were not eligible.

“The only thing that would stop me is that it’s a phone call… nothing in the actual communication would stop me, it’s just the means of doing it.”

WTC claimant interview, 41, female

It could be helpful to add a brief explanation as to why it is not possible to confirm eligibility for the disability element without claimants contacting HMRC.

Some claimants believed that the letter implied that they would have a named individual caseworker. The phrasing of ‘please phone me’, accompanied by a signature, indicated to them that they would have a specific point of contact. This led to some confusion over whether the phone number listed was the general tax credit helpline number, or the number of the named signatory.

Report changes that affect your tax credits GOV.UK page

Claimants were shown an existing GOV.UK webpage about reporting changes that may affect an individual’s tax credit claim. As with the letter, they were first asked to react to the webpage as a whole, followed by a more detailed exploration of each section. The GOV.UK webpage shown was a general section about tax credits rather than a specific webpage on the disability element of tax credits.

Most claimants were familiar with the webpage and reported they had visited it before, with only a few saying they had never been on it. Upon seeing the webpage for the first time, many claimants liked it, and described it as ‘straightforward’ and easy to go through, with clear formatting.

However, when going through the webpage in more detail, most claimants felt that there was too much information. One claimant described it as ‘very wordy’. A few admitted they would only skim read it, with some commenting they would probably not get to the end of the page, missing information relevant to the disability element. When asked to find a specific sentence or bullet point on the disability element within the page, some struggled to locate this, as the specific disability element information was not in a separate section. More sub-sections with clear headings, distinguishing between CTC and WTC, and the disability element of tax credits, would help break up the page and guide readers towards relevant information.

The webpage contained several hyperlinks, which some claimants liked and found useful. However, a claimant working with vulnerable adults observed that having a lot of hyperlinks can be confusing for people with learning difficulties. Another complained that the links on the GOV.UK webpages were often ‘broken’ and led to pages that were no longer available.

“Quite a lot of the time some of the links don’t work, or quite a lot of the time take you to another link, to another link, so I just give up”

CTC claimant group, 56, female

There were some concerns raised about the ‘Deadline for reporting’ section, which was described as ‘frightening’ and ‘threatening’. A few claimants felt that this section implied that their honesty was being questioned. They wanted to see an acknowledgement from HMRC that claimants can make honest mistakes, especially if they have disabilities which may make it difficult to read, write, or perform simple calculations. Other suggestions to improve the messaging in the section were:

• do not specify the fine amount to avoid causing unnecessary anxiety

• give more prominence to the section by having it at the top of the webpage, so it cannot be missed

• have the deadline in bold to increase its visibility

A claimant suggested adding a sentence within the ‘Deadline for reporting section’ acknowledging that claimants may need extra time to report changes due to their disability: ‘We expect you to do your best to report changes within one month, or in exceptional circumstances within 2, if you do not do this you could be fined. If you’re unsure, contact this number.’

In the ‘Other changes you should report’ section, there was a reference to people who may ‘stop and start having a disability’. Claimants described this wording as ‘vague’, ‘strange’, ‘a bit insulting’ and ‘unclear’. Some claimants in a WTC focus group recognised it may be possible for a disability or condition to cease, or that new technologies may allow people with certain disabilities to perform better at work. However, they reiterated how some conditions or disabilities are not curable. Claimants felt that rephrasing this to ‘if your condition worsens/improves’ would be more accurate.

Claimants had some further specific ideas on how to improve the webpage to make it more relevant to the disability element of tax credits. Suggestions included:

• having a video to summarise the information on the webpage

• including mentions of support organisations that can help people claiming the disability element

• highlighting key information such as deadlines and calls to action by having them in bold

Disability helpsheet TC956 checklist

The TC956 Tax credits: disability helpsheet is an information document focused on the conditions individuals must meet to qualify for the disability element of WTC and CTC. It is available on GOV.UK, and sometimes it is sent to claimants by post. IFF created an adapted version of the TC956 Tax credits: disability helpsheet and turned it into a checklist based on the government guidelines for producing Easy Read documents.

The checklist had 2 main sections, one about the disability element of WTC and the other about the disability element of CTC. Claimants were shown the whole leaflet, but most of the discussion was focused on the section relevant to their claim.

Most claimants of the disability element of WTC had slightly less positive initial reactions to the checklist. They were not familiar with the detailed information on disability eligibility and disability benefits, so they assumed that the checklist contained new information. Those claiming the disability element of CTC were more positive, as they were more likely to recognise the information and appreciated a simplified version.

Overall, claimants liked the checklist format, they felt it would enable them to easily mark elements that were applicable to them, and they felt it could act as a useful record. They thought it would be particularly helpful for those claiming the disability element of tax credits or a qualifying disability benefit for the first time. They felt it would be less helpful for those already claiming the disability element.

Most liked the images, as they felt they made the information easier to understand and created space between the written content. This helped claimants to digest the information contained within the checklist. Some did not like the images, but this appeared to be mostly due to the choice of pictures used, which at times they felt were not linked to the content they were describing. However, this concern could be easily overcome by adjusting the images that have been selected.

When it came to language, similarly to the comments about the letter, some claimants felt that the word ‘may’ created uncertainty. They were concerned they would spend time applying and be told they are not eligible. Claimants with disabilities fluctuating in severity or impact felt that the absolute language of ‘I cannot’ lacked nuance. They suggested changing the wording to ‘sometimes I cannot’ or ‘I struggle to do x around % of the time’. There were also some who felt that the language was too complicated in places, but they struggled to provide examples.

Claimants also commented that in a few places the layout and format of the checklist could be improved. A few said that there was not enough space between content on the same page. This made it difficult for them to identify separate paragraphs on the checklist.

Claimants of the disability element of WTC generally did not like the cross-referencing between pages. They wanted all the information necessary to mark a check box in one place, so they would not lose track. They struggled to find the page referred to by the cross-referencing in the document, also due to the font being too small. An online version of the checklist could help to overcome some of these difficulties, as the responses provided would automatically route the claimant according to the previous elements they selected. However, claimants wanted both an online and a paper-based version of the checklist, so they could use whichever format was more suited to their specific needs.

If providing paper or pdf versions of the checklist, it would be preferable to have two separate documents. One version would relate to the disability element of CTC and the other to the disability element of WTC. This would help create shorter documents, as some complained about the length of the checklist. It would also be beneficial for CTC claimants who found it difficult to navigate around the WTC content.

For some claimants, the list of eligible benefits was difficult to follow and the unfamiliar information created a ‘fog’, so they felt lost in the information provided. The list of benefits was in a bullet point format and one claimant commented that a less formal layout, in line with the rest of the leaflet, may make it easier to follow.

When claimants were briefly shown the TC956 Tax credits: disability helpsheet, most did not recognise it. One claimant said they had received it with their renewal pack but admitted that they did not look at the helpsheet. Some felt that while this provides useful information, it is not easy to find online – ‘you need to know where to look’. It was also described as ‘far too much, too many words’.

”[The helpsheet is] definitely overwhelming, to the point where you shut off”.

CTC claimant group, 49, female

There were mixed views as to whether the checklist or helpsheet was preferred. However, some of the key concerns with the original helpsheet had been overcome by the checklist. Fewer words and a checklist element would help to make the information easier to understand.

5.2 System and communication adjustments which may support claimants to report changes

Phase 1 and Phase 2 of the research highlighted that implementing a series of communication and system changes could help support disability tax credit claimants to report changes in their circumstances to HMRC.

When it comes to those claiming the disability element of WTC, communication preferences and needs varied depending on their disability and its impact on claim management. It would be beneficial for claimants with a disability to be provided with more choice and flexibility in how they can manage their claim and report changes. Claimants could be allowed to state their communications preferences with HMRC and be given more flexibility with deadlines for reporting changes. There was a strong feeling that HMRC should treat those claiming the disability element of WTC differently to other claimants.

Claimants suggested several process changes which could help to make HMRC’s reporting services more accessible for individuals with a disability. This may in turn help claimants to report changes impacting the disability element of their claim. The following options were suggested:

• reinstating the webchat, which allowed claimants (especially deaf ones) to communicate directly with HMRC, and allowed them to download transcripts of the conversation

• allowing enquiries via email

• making it possible to book a telephone appointment, so claimants do not have to wait on hold

• providing a dedicated phoneline for customers with disabilities

• training helpline staff in supporting individuals with a disability (increasing awareness of how different disabilities may impact recall and the time needed to answer questions and source information)

• sending text reminders or nudges about reporting and reminders that people can report changes online

• providing confirmation options to reassure customers they have successfully submitted information online

5.3 Preferences for future communications

Phase 1 revealed that personalised, written communications from HMRC were preferred by most claimants.

Receiving updates and other communications from HMRC via email was seen as convenient by some claimants. Emails carried the additional benefits of being environmentally friendly and cost effective for HMRC when compared to paper communications. However, claimants of the disability element of WTC may lack skills or confidence using IT. Several claimants raised concerns about potential scams. They felt that it may be difficult for some to distinguish between genuine HMRC communication and phishing emails. They also feared emails ending up in ‘junk’ folders.

"A brown envelope for me are like red rags to a bull, I get stressed, I get anxiety so preferably not a letter. So, emails are good. I do question emails as there are so many fake emails nowadays.”

WTC claimant interview, 38, female

HMRC communication through letters by post was seen by many as more trustworthy than emails, as they were perceived to carry less risk of being a scam. A claimant commented they appreciated that letters can be put aside to be read when they felt ready or had enough time to process the information. They felt they could not do the same with emails. It was also common for claimants to report associating letters from HMRC with feelings of anxiety. This may lead claimants to feel overwhelmed and ignore letters, refusing to engage out of fear and stress. Another potential issue with paper communications raised by claimants was that these can be delayed or lost. This can be an issue, especially where deadlines are tight.

Another way for HMRC to contact claimants could be by phoning them directly. This was seen as convenient for those who may struggle with written communications due to their disability, for example claimants with visual or cognitive impairments. This method was felt to enable more detailed discussions and give claimants the opportunity to get answers to their immediate questions. Potential negative aspects included the possibility of being called at an inconvenient time, and that calls may be mistaken for scam calls.

“I just think that for somebody to randomly ring me out of the blue from WTC would be so suspicious.”

WTC claimant interview, 46, male

Claimants saw receiving SMS from HMRC as convenient for reminders, for example around milestones which may lead to changes in tax credit claims. Social media communication was perceived in a similar way. A few claimants said social media could be useful for increasing awareness, sharing general information, and reminders. Claimants did not see SMS or social media communications as appropriate to communicate personalised or important information.

6. Conclusions

Tax credit claimants claiming the disability element of WTC and or CTC were generally aware of the eligibility criteria that was relevant to their situation when they initially applied. However, they struggled to recall or understand all the complex eligibility criteria. Those claiming the disability element of WTC tended to have a more limited understanding of the criteria than those claiming the disability element of CTC.

Disability element claimants understood that it was their responsibility to report any changes of circumstance which may impact their eligibility for the disability element of their claim to HMRC. However, claimants suggested they would report a change not because they understood why they needed to, but that they generally knew they must notify HMRC of any changes. This seemed to lead to claimants contacting the tax credit helpline a lot to check whether changes impacted their claim.

Claimants described several barriers or reasons that may prevent disability element claimants from reporting. They mentioned a lack of understanding of the criteria or of when to report a change. They noted that if a change was seen as small and not significant, claimants may decide to wait until the Annual Review. Others also noted that disabilities or health conditions can impact claimants’ physical and emotional capacity to report a change to HMRC. The timeframe for reporting was also mentioned as a possible barrier, as a month was not considered long enough to recognise a material change in health. Additionally, some felt that if the change is a deterioration, then this in itself can prevent reporting.

Claimants also discussed their previous experiences when trying to contact HMRC via the tax credit helpline. They felt that the system for reporting could sometimes act as a barrier, due to long wait times and advisers not understanding how a claimant’s disability or health condition may impact their ability to recall and provide information. There was also confusion among some claimants about whether HMRC and DWP communicate. This confusion led to some individuals assuming that if they reported a change to one of the departments all of their benefit entitlements would be updated.

There was a suggestion from claimants that some individuals may intentionally avoid or delay notifying HMRC of a change, as they may be concerned about losing part of their tax credit claim. There was evidence to suggest that in some cases this may be due to concerns around Universal Credit and the impact the transition may have on the claimant.

Claimants did identify some communication and system changes HMRC could make to help support disability element claimants to report changes. They felt it was important for HMRC to provide more flexibility and choice in how claimants can notify them of changes in relation to the disability element of their claim. Reinstating the webchat function, enabling email enquiries, booking telephone appointments, a phoneline for individuals with a disability or health condition, and disability awareness training for helpline staff would help to create a more accessible and flexible reporting system.

The experience and understanding of disability element claimants varied. Those claiming the disability element of WTC were more likely to experience barriers to reporting and would therefore need more support to overcome these barriers. This is not surprising as individuals claiming the disability element of WTC must have a disability or health condition, whereas those claiming the disability element of CTC have a child with a disability of health condition.