It is common for individuals not to take up welfare benefits. The most common explanation is that people make a rational choice between the utility they expect from the benefit and the effort required to take‐up. Most studies utilize surveys, which are subject to misreporting and measurement errors, to determine eligibility and non‐take‐up rates. This study uses a novel dataset based on administrative data sources, which provides a more accurate identification of eligible households and take‐up. Furthermore, this study documents non‐take‐up of a compensation to which nearly 5 million Dutch households are entitled. The richness of the data allowed us to conduct a detailed analysis of key drivers of non‐take‐up. The analysis largely confirms the transaction‐costs hypotheses. However, we found an unexpected effect. Although, in general, the probability of take‐up increases when income decreases, those with the lowest income or wealth do not have the highest probability of take‐up.