Charge in-unit non-dependants in the local Council Tax Reduction schemes, and exclude a lodger personally only outside the head's family

.github/test_outcome_allowlist.toml

@@ -64,3 +64,10 @@ nodeid = "policyengine_uk/tests/test_dwp_published_rates.py::test_projection_con
 outcome = "skipped"
 reason = '^(not uprated|series ends before 2026-27|Universal Credit Act 2025 s\.1 departs from CPI uprating)$'
 why = "The test is parametrised over every DWP rate parameter and skips those it does not apply to: parameters with no uprating, series that end before 2026-27, and the four UC standard allowances, whose minimum the Universal Credit Act 2025 s.1 sets above CPI uprating (#1925). The LCWRA element, frozen by s.3, is checked against its own uprating index (#2284). 64 cases on 12 October 2026."
+
+[[allow]]
+nodeid = "policyengine_uk/tests/microsimulation/test_annual_allowance_against_hmrc.py::test_2024_annual_allowance_charge_and_payers_are_near_hmrc"
+outcome = "xfailed"
+reason = "policyengine-uk-data#606"
+data = ["present"]
+why = "Known data gaps, chiefly PolicyEngine/policyengine-uk-data#606: the certified Enhanced FRS imputes employer pension contributions as three times employee contributions, which puts the 2024 annual allowance count, charge and excess several times above HMRC's; with a third of those contributions all three fall within the band. Pinned by a strict xfail until the data is fixed (#2523)."

.github/workflows/pr_code_changes.yaml

@@ -162,7 +162,7 @@ jobs:
         run: uv pip install policyengine --system
       - name: Test documentation builds
         run: make documentation
-  # The YAML tests, the Python tests on four runners, and the check that
+  # The YAML tests, the Python tests on five runners, and the check that
   # every test ran once and passed, in the locked environment. As one job
   # they took 59 minutes on 10 October 2026 (run 38075384588), and runs were
   # cancelled at a 60-minute limit (issues #2099 and #2257). The release

.github/workflows/test-suite.yaml

@@ -4,10 +4,10 @@
 # publish. All three run the same jobs in the same locked environment.
 #
 # Jobs: the YAML policy tests (which also list every Python test), the Python
-# tests split over four runners, and Result, which fails unless every listed
+# tests split over five runners, and Result, which fails unless every listed
 # Python test ran in exactly one shard and passed, apart from the outcomes
 # accepted in .github/test_outcome_allowlist.toml. A caller that names its job
-# Test gets the checks "Test / YAML", "Test / Python K/4" and "Test / Result";
+# Test gets the checks "Test / YAML", "Test / Python K/5" and "Test / Result";
 # "Test / Result" is the one to require.
 
 name: Test suite
@@ -82,6 +82,9 @@ jobs:
           TESTS: ${{ steps.env.outputs.tests }}
         run: policyengine-core test "$TESTS/policy" -c policyengine_uk
       - name: List the Python tests
+        id: collect
+        # Keep Result's coverage audit available after a policy YAML failure.
+        if: ${{ !cancelled() && steps.env.outcome == 'success' }}
         # Every Python test, collected without --shard, in the environment
         # the shards use. Result checks that the shards ran each of these
         # exactly once.
@@ -99,6 +102,7 @@ jobs:
             --collect-only -q -p no:cacheprovider > collected.txt
           tail -n 1 collected.txt
       - name: Upload the list of Python tests
+        if: ${{ !cancelled() && steps.collect.outcome == 'success' }}
         uses: actions/upload-artifact@v7
         with:
           name: test-collected
@@ -118,17 +122,23 @@ jobs:
     # the 16 GB runners peaked at 15.6 GB, 283 MB short of running out
     # (run 38156967136; two shards of an earlier run lost their runners).
     # With four, each worker runs about a quarter fewer tests.
+    #
+    # Five, not four, for time: on 20 and 21 October shard 1/4 took 50 to
+    # 52 minutes on unrelated pull requests, close to the timeout. A pull
+    # request adding about a fifth more parameters (#1855) hit the timeout
+    # on shard 1/4 twice, and its other shards took 48 to 59 minutes (run
+    # 39568525017).
     name: Python ${{ matrix.shard }}/${{ strategy.job-total }}
     if: ${{ !inputs.skip }}
     runs-on: ubuntu-24.04-arm
     # The shards took 15, 20 and 15 minutes on 10 October (run
-    # 38085920460). 60 minutes leaves room for a slow runner and still
-    # stops a hung shard.
+    # 38085920460), and up to 52 minutes with four shards on 21 October.
+    # 60 minutes leaves room for a slow runner and still stops a hung shard.
     timeout-minutes: 60
     strategy:
       fail-fast: false
       matrix:
-        shard: [1, 2, 3, 4]
+        shard: [1, 2, 3, 4, 5]
     steps:
       - name: Checkout repo
         uses: actions/checkout@v6

Makefile

@@ -21,7 +21,7 @@ test-yaml:
 
 # Every Python test, serially. To spread them over four cores add
 # PYTEST_ARGS="-n 4 --dist worksteal" (pytest-xdist); to run what one CI
-# shard runs, add "--shard K/4" (policyengine_uk/tests/conftest.py). CI runs
+# shard runs, add "--shard K/5" (policyengine_uk/tests/conftest.py). CI runs
 # these tests through .github/workflows/test-suite.yaml, in the locked
 # environment (uv sync --frozen --extra dev), and also checks each test's
 # outcome against .github/test_outcome_allowlist.toml.

changelog.d/2014-local.fixed.md

@@ -0,0 +1 @@
+Charge non-dependant deductions in the English working-age local Council Tax Reduction schemes (Merton, Kingston upon Thames, Newham, Westminster, Oxford) as the national schemes do: for adults in the applicant's own benefit unit (the applicant identified as for the means test, so a grandmother who applies alone is charged for the couple in her benefit unit), separately for each adult in another family who is not its claimant or partner, and apportioned between jointly liable applicants. Band a claimant or partner on the couple's joint income and anyone else on their own, each on their own hours; exempt a non-dependant on Income Support, income-based JSA, income-related ESA or State Pension Credit only if the award is payable to them, and one on Universal Credit only if they have no earned income of their own; and deduct for each member of a Universal Credit couple in Westminster, as the Default Scheme does. In every scheme, national and local, someone who pays the householder for their own board or lodging, or is a joint tenant, is not a non-dependant even where the rest of their family is, except a member of the household head's own family who pays board, who is taken to be a close relative.

docs/book/assumptions/benefit-minimum-ages.md

@@ -0,0 +1,81 @@
+# Benefit minimum ages
+
+Computed Carer's Allowance, Carer Support Payment (CSP) and Disability Living
+Allowance (DLA) mobility awards apply these minimum ages to each person's existing
+annual `age` input:
+
+| Computed benefit | Minimum age |
+| --- | ---: |
+| Carer's Allowance | 16 |
+| CSP | 16 |
+| Higher DLA mobility component | 3 |
+| Lower DLA mobility component | 5 |
+
+The Carer's Allowance condition appears in section 70(3) of the
+[Great Britain Act](https://www.legislation.gov.uk/ukpga/1992/4/section/70) and its
+[Northern Ireland counterpart](https://www.legislation.gov.uk/ukpga/1992/7/section/70).
+CSP's condition is in
+[regulation 4(1)](https://www.legislation.gov.uk/ssi/2023/302/regulation/4).
+The DLA mobility ages and corresponding higher/lower routes appear in sections
+73(1), (1A) and (11) of the
+[Great Britain Act](https://www.legislation.gov.uk/ukpga/1992/4/section/73) and
+[Northern Ireland Act](https://www.legislation.gov.uk/ukpga/1992/7/section/73).
+Other qualifying conditions remain necessary. These gates do not implement a full
+eligibility assessment or change education, caring, disability, duration, upper-age
+or programme-replacement rules.
+
+## Reported inputs and amount overrides
+
+A positive `carers_allowance_reported` value or sufficient caring hours cannot
+bypass the age condition in the computed CA/CSP pre-overlap amount. A DLA mobility
+category similarly cannot bypass its category's age condition. The raw reported
+amounts and categories remain stored inputs.
+
+Explicitly supplying a pre-overlap or final amount keeps the model's generic input
+override behavior. For example, an explicit `carers_allowance` or `dla_m` amount
+can override its formula. Such an override is not evidence of statutory
+entitlement. Report-only positive carer cases also preserve an existing proxy;
+reported receipt does not legally waive the qualifying-care requirements.
+
+DLA care has no categorical minimum-age floor. Its separate needs, duration and
+child-comparison conditions still apply, as set out in
+[section 72](https://www.legislation.gov.uk/ukpga/1992/4/section/72) and its
+[Northern Ireland counterpart](https://www.legislation.gov.uk/ukpga/1992/7/section/72).
+A care category for an infant assumes those conditions; it is not automatic
+entitlement. DLA totals continue to add the care and mobility components.
+
+## Dates and the annual model
+
+The CA age parameter begins on 1 January 2015 as the model's existing coverage
+anchor. This is not a claim that the legal age condition commenced in 2015.
+CSP's raw age parameter starts on 19 November 2023, the commencement of regulation
+4. The DLA mobility parameters start on 9 April 2001, as recorded in the Acts'
+amendment annotations. These dates do not fill missing historical benefit rates
+or expand the existing Scottish CA-to-CSP model switch from 2025.
+
+`age` is a Person/YEAR floating-point stock, with an existing default of 40 when
+omitted. The gates compare it directly, without flooring or rounding fractional
+ages. Awards retain the existing annual rate-times-52 convention. They do not
+calculate exact birthdays, part-year awards or award weeks. In particular, this
+does not newly implement CSP regulation 4(2)'s leap-day birthday rule.
+
+At the unchanged 2026 rates, an otherwise qualifying carer aged 16 receives
+£4,495.40 before overlap; an under-16 computed award is zero. Higher and lower DLA
+mobility amounts are respectively £4,160 and £1,575.60 annually once the relevant
+age floor is met. These conditional examples do not estimate a population effect
+or establish independently encoded parity.
+
+## Combined CSP conditions
+
+This change is stacked on the repaired [PR #2473](https://github.com/PolicyEngine/policyengine-uk/pull/2473).
+Both the age condition and the earnings condition apply to computed CSP, including
+the reported-Carer’s-Allowance input proxy. Natural-pay cases combine age15,
+fractional ages below16, age16, the exact annual earnings limit and favorable
+fractional-penny treatment. The shared reader retains merged [PR #2444](https://github.com/PolicyEngine/policyengine-uk/pull/2444)
+NI-age deductions. Existing annual/award-week, PAYE and care-charge qualifications
+remain in the [CSP earnings assumptions](carer-support-payment-earnings.md).
+
+Only after #2473 actually merges should this branch be retargeted and revalidated
+on current main; a queue entry or passing checks do not establish that landing.
+The shared-parameter change in open [PR #2518](https://github.com/PolicyEngine/policyengine-uk/pull/2518)
+requires future CSP-reader/prose coordination; it is not copied or repaired here.

docs/book/assumptions/capital-gains-distribution-plan.md

@@ -0,0 +1,133 @@
+# Capital gains distribution
+
+```{note}
+**Planning page, updated October 2026.** Tracks
+[#818](https://github.com/PolicyEngine/policyengine-uk/issues/818)
+(model gains jointly across income groups) and
+[#817](https://github.com/PolicyEngine/policyengine-uk/issues/817)
+(don't impute gains to households with no wealth). The imputation lives
+in the data build, not in this repo. Most of what this page proposed
+in May 2026 has since been built in
+[Microcosm UK](https://github.com/PolicyEngine/microcosm), which builds
+the replacement for the Enhanced FRS. The certified UK default dataset is
+still the Enhanced FRS from
+[policyengine-uk-data](https://github.com/PolicyEngine/policyengine-uk-data)
+(release 1.58.0). What remains is listed at the end of this page.
+```
+
+## How the model uses capital gains
+
+`capital_gains_before_response` is a person-level input, uprated by OBR
+per-capita GDP growth. `capital_gains_tax` charges it at the main CGT
+rates, with three components charged at their own rates (all added by
+[#1861](https://github.com/PolicyEngine/policyengine-uk/pull/1861)):
+
+- `capital_gains_badr`: gains qualifying for Business Asset Disposal
+  Relief or Investors' Relief, at the relief rate up to the lifetime
+  limit;
+- `capital_gains_residential_property`: gains on UK residential
+  property, at the residential rates;
+- `capital_gains_carried_interest`: carried interest, at the carried
+  interest rates.
+
+Each is a component of the total, not an addition to it.
+
+Behavioural responses: `capital_gains_behavioural_response` changes
+realisations using an elasticity with respect to the retention rate
+(`relative_capital_gains_retention_rate_change`) or the marginal tax
+rate. Gains use `gov.simulation.capital_gains_responses.elasticity`,
+which is 0 by default, so there is no response unless a user sets it.
+When `gov.simulation.capital_gains_responses.separate_badr_elasticity`
+is true (false by default), gains qualifying for BADR respond at
+`badr_elasticity` instead (1.4, the value the OBR used for these gains
+in its January 2025 costing), through `capital_gains_badr_elasticity`.
+
+## How the gains are imputed
+
+### Enhanced FRS: one distribution per income band
+
+The Enhanced FRS (policyengine-uk-data, the certified default) fits a
+spline to the Advani and Summers gains percentiles within each income
+band and draws each household's gains from its band. The spline alone
+cannot produce gains above about £2m, so policyengine-uk-data main (not
+yet in a release) also stacks 30 donor households per HMRC
+size-of-gain band and calibrates to HMRC counts and amounts of gains by
+band. #818 pointed out the problems with the
+band-by-band fit:
+
+- each band's upper tail was fitted on few observations, so the tails
+  were noisy and the joint distribution of income and gains had breaks
+  at band boundaries;
+- two people in the same band drew from the same distribution however
+  different their incomes;
+- gains depended on income only, not on wealth, so they could be
+  imputed to households with no assets (#817).
+
+### Microcosm UK
+
+Microcosm builds gains in six stages (see the UK
+[sources specification](https://github.com/PolicyEngine/microcosm/blob/main/packages/microcosm-build/src/microcosm/build/uk/spec/sources.yaml)):
+
+1. **Support split** (`cgt_support_split`). Within each income band of
+   HMRC Capital Gains Tax statistics Table 3, the households with the
+   most investable wealth (financial wealth, business wealth and
+   property other than the main home) are split into lighter copies, so
+   that there are enough rows to hold the largest gains.
+2. **Who has gains** (`cgt_incidence_clone`). The set and order of
+   gainers come from the incidence distribution in Advani and Summers
+   (2020), *Capital Gains and UK Inequality* (CAGE Working Paper 465).
+3. **How much** (`hmrc_cgt_gains_spine`). Amounts are redrawn so that
+   gains match HMRC Table 3 for 2024-25, which counts taxpayers and
+   gains **jointly by size of gain and taxable income**, conditioned on
+   Tables 1, 2.1a, 5 and 6.
+4. **Weight anchor** (`cgt_incidence_anchor`). Clones below the annual
+   exempt amount carry more weighted people than HMRC publishes, so the
+   excess weight is moved back to each clone's paired original.
+5. **Residential property** (`cgt_residential_split`). Gains on UK
+   residential property are fitted to Table 8 (2024-25 residential
+   property disposals) by splitting households into weighted copies,
+   which fills `capital_gains_residential_property`.
+6. **What kind** (`hmrc_cgt_asset_type_spine`). Of the remaining gains,
+   those qualifying for BADR or Investors' Relief are fitted to Table
+   4.1, which fills `capital_gains_badr`, and the rest are given asset
+   types from Table 7 (gains by asset type, 2023-24).
+
+All the HMRC tables come from the Capital Gains Tax statistics July
+2026 release, through Microcosm's pinned Chronicle feed.
+
+Against #818: gains are now fitted to the published joint distribution
+of gain size and taxable income, not band by band. Against #817:
+the largest gains are placed on the wealthiest households in each
+income band. Microcosm's release checks also include a projection check
+on people just below the annual exempt amount
+(`uk_cgt_projection_entrants` in `gates.json`), so that
+uprating does not push implausible numbers of them into paying CGT in
+later years.
+
+## What is left
+
+- **A zero-wealth test.** Add a test, here or in Microcosm, that no
+  positive gains sit on households with zero investable wealth. Neither
+  repo asserts this directly yet, so #817 should stay open until it
+  does.
+- **Close #818** once a Microcosm UK dataset is the certified default
+  and its diagnostics confirm the Table 3 fit; link them from the issue.
+- **Elasticities by group.** Responses use one main elasticity and one
+  BADR elasticity. With the joint distribution in place, an elasticity
+  that varies by income or size of gain becomes possible, at the cost
+  of more parameters to justify.
+- **Wealth source.** Investable wealth comes from Microcosm's Wealth
+  and Assets Survey imputation. Its quality limits how well #817 can be
+  met.
+
+The quantile regression forest approach proposed here in May is no
+longer needed for this.
+
+## References
+
+- Issues: [#818](https://github.com/PolicyEngine/policyengine-uk/issues/818), [#817](https://github.com/PolicyEngine/policyengine-uk/issues/817).
+- CGT components: [#1861](https://github.com/PolicyEngine/policyengine-uk/pull/1861).
+- HMRC, [Capital Gains Tax statistics](https://www.gov.uk/government/statistics/capital-gains-tax-statistics).
+- Advani, A. and Summers, A. (2020), *Capital Gains and UK Inequality*, CAGE Working Paper 465.
+- Microcosm UK [sources specification](https://github.com/PolicyEngine/microcosm/blob/main/packages/microcosm-build/src/microcosm/build/uk/spec/sources.yaml) (stages `cgt_support_split`, `cgt_incidence_clone`, `hmrc_cgt_gains_spine`, `cgt_incidence_anchor`, `cgt_residential_split`, `hmrc_cgt_asset_type_spine`).
+- OBR (2025), [Costing of changes to the main, BADR and IR rates of capital gains tax](https://obr.uk/docs/dlm_uploads/CGT-supplementary-release-Jan-2025.pdf).