Stack gains on taxable income when splitting the higher and additional CGT bands

[vahid-ahmadi]

Fixes #2432

What and why

capital_gains_tax split gains above the basic rate band between the higher and additional CGT bands using the whole higher band (higher_rate_limit - basic_rate_limit, £87,440 in 2025-26) for every gainer. It never subtracted taxable income already above the basic rate limit, so a reform that sets the CGT higher and additional rates apart charged someone with £200,000 of income at the higher rate on their gains.

Gains are the top slice of income (TCGA 1992 ss. 1H(3), 1I). In law CGT has only two rates, 18% and 24%, and the model's additional_rate parameters exist only so reforms can mirror the income tax additional-rate band. For that split to mirror income tax, the gains above the basic rate band start at taxable income or the basic rate limit, whichever is higher:

remaining_higher_rate_band = max_(
    higher_rate_limit - max_(taxable_income, basic_rate_limit), 0
)

The main, residential property, carried interest and relief schedules share one higher-band loop, so the fix covers all four. No values are hard-coded.

£200,000 of earnings and £50,000 of gains, 2025-26:

Reform	Main	This branch
Current law	£11,280	£11,280
CGT additional rate 45%	£11,280	£21,150
CGT higher rate 45%	£21,150	£11,280

Current law

The higher and additional CGT rates are equal at every date, so current-law CGT is unchanged apart from float32 rounding where gains now straddle the moved split point. Two frozen expectations were updated for this:

• test_gift_aid.py::test_zero_gift_preserves_main_outputs_bit_for_bit: one row (£101,000 earnings, £40,000 gains) moves from 8880 to 8879.9990234375.
• test_capital_gains_tax_components.py::legacy_capital_gains_tax: the reference formula behind the bit-identity tests now uses the stacked higher band, so it still matches the new formula bit for bit.

TestEqualisationReforms hard-coded the buggy figure (£39,278: 87,440 at 40% and 9,560 at 45% on £87,430 of taxable income). Its expectation is now £41,764.50: 37,710 at 40% and 59,290 at 45%.

Interaction with #2419

#2419 (default CGT realisation response) answers the rate on the last pound of gains, so the wrong band also drives the wrong response there. Its docs example (£100,000 earnings, £200,000 gains, higher rate raised to 45%) quotes tax rising from £47,280 to £65,642 with no response. After this fix it rises to about £55,199: 37,710 at 45% and 159,290 at 24%. Its other example, with both rates at 45%, does not change.

Test plan

• New capital_gains_tax_rate_bands.yaml (10 cases, hand-computed): income below the basic rate limit, between the limits and above the higher rate limit under an additional-rate reform; higher-rate reforms; residential property and carried interest additional-rate reforms; current law; and the earnings-based example above. 7 fail on main and all pass here. The 3 that pass on main are the two current-law cases and the below-basic-limit case, where the whole band is correctly left.
• policyengine-core test policyengine_uk/tests/policy: 3,444 passed.
• pytest test_capital_gains_tax_components.py test_capital_gains_responses.py test_capital_gains_projection.py test_gift_aid.py and the other tests that touch CGT: pass.
• Full pytest -n 8 policyengine_uk/tests: 5,966 passed, 102 skipped, 1 xfailed.
• ruff format --check and ruff check: clean.
• Changelog fragment in changelog.d/

Reproducer

Reproducer: policyengine_uk/tests/policy/baseline/gov/hmrc/capital_gains_tax/capital_gains_tax_rate_bands.yaml, policyengine_uk/tests/test_capital_gains_tax_components.py::TestEqualisationReforms::test_main_rate_reform_leaves_the_other_schedules_at_current_law

axiom: n/a: the additional CGT band is a model-only reform hook; TCGA 1992 ss. 1H-1I as enacted have two rates (18% and 24%) and the higher and additional parameters are equal at every date, so no encoded rule or current-law result changes

🤖 Generated with Claude Code

[juaristi22]

Reviewed 54fa62d64d28a976df2ac6cc3ce5e79a38d53a5d. The new remaining-band expression matches the declared third-band reform convention in isolation, but it exposes one material interaction with the annual exemption.

C1 — Allocate the exemption at the rates actually reached after stacking. At capital_gains_tax.py:75–77 (consumed at line 179), the higher-band capacity becomes zero for a person already above the higher limit. The unchanged exemption ordering at lines 141–151 still compares only each schedule’s higher_rate, so it can exempt the wrong gains.

Reproducer: one adult aged 45 in 2025, employment income £200,000, total gains £50,000, of which residential-property gains are £25,000; reform only gov.hmrc.cgt.additional_rate to 0.45. No intermediate tax, allowance or eligibility inputs are supplied, and behavioural elasticities retain their zero defaults.

Head charges £16,530 CGT. It assigns the £3,000 exemption to residential gains at 24%, while the remaining main gains are now charged at 45%. Assigning the exemption to main gains instead gives £15,900: £25,000 × 24% + £22,000 × 45%. The resulting £630 excess reaches household tax and net income. An independent same-head simulation using only the exact captured-base CGT formula gives £11,280: under the old whole-higher-band allocation all £47,000 taxable gains in this case remained at 24%, so exemption placement was immaterial. This demonstrates why the changed split exposes the interaction.

TCGA 1992 s.1K(5) preserves the most-beneficial exemption allocation, irrespective of the otherwise applicable rate. The third rate remains a hypothetical reform hook; this finding does not claim it is an enacted general CGT rate. Please preserve beneficial exemption allocation under the new stacked bands and add a mixed-schedule regression. The new YAML cases each use only one taxable gain schedule.

Validation: 243 repository checks and 11 independent diagnostics passed; the added mixed-gain exemption regression failed at £16,530 versus £15,900. One private microsimulation test was deselected. Independent boundary, Gift Aid/pension extension, four-schedule conservation and final household-income checks passed. A 384-household synthetic current-law comparison against the captured-base formula found only float32 rounding differences (maximum CGT £0.0078125, household tax £0.015625; final net income unchanged). Nine official source originals checked. The Axiom n/a explanation and required reproducers/changelog are adequate.

At capture and the mid-review check, four hosted Python shards were still running; other reported checks passed. Review status: COMPLETE. Review severity: REQUEST_CHANGES. Confirmed critical count: 1.

[vahid-ahmadi]

Thanks, María. On your review of 54fa62d64:

1. C1, exemption allocation after stacking: fixed in 750de1345. The annual exempt amount is now ordered for each person by the rate their top gains in each schedule actually reach: a schedule's additional rate where, before the exemption, any of its gains are above the higher rate band, and its higher rate otherwise (relief gains keep their flat rate, ties keep declaration order). Under current law the higher and additional rates are equal, so the order and results do not change, and the bit-identity tests still pass unchanged.
   • Your case (age 45, £200,000 earnings, £50,000 gains of which £25,000 residential, gov.hmrc.cgt.additional_rate 0.45) now gives £15,900 (25,000 × 24% + 22,000 × 45%). It gave £16,530 before the change.
   • New mixed-schedule regressions: that case in capital_gains_tax_rate_bands.yaml, and TestExemptionAllocation::test_exemption_follows_each_persons_top_rate in test_capital_gains_tax_components.py, which runs it alongside a £100,000 earner in the same simulation so the order is checked per person.
   • The Make a retention-rate elasticity of 1 the default CGT realisation response #2419 docs example (single schedule) is unaffected: still about £55,199.
2. Tests: CGT component, response, projection and Gift Aid tests 186 passed, 1 skipped; other CGT-touching tests and code_health 2,455 passed; full YAML policy suite 3,445 passed; ruff format --check and ruff check clean.

Nothing here waits on Vahid.

🤖 Generated with Claude Code

[vahid-ahmadi]

Follow-up: the first CI run failed only on the new pytest, because main's default realisation response (#2419, merged 15 October) moved the gains under the reform (13,516.78 rather than 15,900). I merged origin/main into the branch (96526d15d) and switched the response off in that test, as TestEqualisationReforms already does (a6a975001). The formula change in 750de1345 is unchanged. CGT tests 188 passed, 1 skipped; CGT YAML 59 passed.

🤖 Generated with Claude Code

[juaristi22]

Follow-up review of a6a975001f332a0017373b00d5ad416e7d19beea for C1. The original £630 example is fixed: it now gives £15,900. The same exemption-allocation requirement remains open at a rate boundary; see the single inline finding.

Independent validation: 56 passed, one reproducer failed, one private-data case deselected. All 53 selected existing checks passed. The identical-input current-law control passes at £7,520; the defect is under the supported hypothetical 45% additional-rate reform, not a claim that current law charges 45%. Nine cached official originals checked; no new downloads or private population run.

Review status: COMPLETE. Severity: REQUEST_CHANGES. Confirmed critical count: 1 (C1, still open).

[juaristi22]

C1 — stop exemption allocation when the marginal rate changes. The fixed ranking exempts a whole schedule even after its top-rate slice is exhausted.

Reproducer: one adult age 45 in 2025, employment income £124,000, total capital_gains £27,000, including capital_gains_carried_interest £25,000; household region LONDON, and all other inputs default. Set gov.hmrc.cgt.additional_rate to 0.45 and gov.simulation.capital_gains_responses.elasticity to 0 for 2025. No tax, allowance or band intermediate is supplied.

Native PA is £570 and taxable income £123,430, leaving £1,710 of higher band. Only £290 of the £2,000 main gains reaches 45%. Head exempts all £2,000 main gains plus £1,000 carried gains and charges £7,680. Exempting £290 main plus £2,710 carried instead gives £7,543.20 (1710×24% + 22290×32%), £136.80 less. The one-time 45% ranking continues exempting main gains after their rate falls to 24%, below carried interest's 32%.

Please preserve the most-beneficial allocation across marginal tranches (the retained TCGA 1992 s.1K(5) principle) and add this boundary regression. The 45% band is a hypothetical supported reform; the original £630 case is resolved, but C1's underlying allocation contract is still open.

[github-actions]

Aggregate impact on certified data: pass

Base 340bedbd85 against head 7927fd0d2e, both on enhanced_frs_2024_25.h5 (policyengine-uk-data 1.58.1, sha256 056e80fd8e91), fiscal years 2025-26 to 2031-32. Each year is a full microsimulation run on each side.

Checks: 0 broken by this change, 1 failing on both sides, 0 fixed. Moves flagged for review: 0 (thresholds in report_spec.yaml; a flag does not fail the job).

Workflow run and full report

Notes

• In the years a figure from fewer than 10 records is suppressed (spending.disabled_students_allowance), every total containing it, and the decile incomes, are rebuilt from their other components, so no published total includes it. Those totals are marked †. A change is withheld where the two sides leave out different figures and can't be lined up.

Moves flagged for review

None.

Receipts by tax head

Measure	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Capital gains tax	+£20	+£124	-£5	+£248	+£29	+£208	+£258

Spending by benefit and service

Measure	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Disabled Students' Allowance	suppressed	suppressed	suppressed	suppressed	suppressed	suppressed	suppressed

Caseloads

Measure	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Disabled Students' Allowance	suppressed	suppressed	suppressed	suppressed	suppressed	suppressed	suppressed

Government balance, each component counted once

Measure	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Government receipts, each component once	+£20	+£124	-£5	+£248	+£29	+£208	+£258
Government balance, each receipt once	+£20 †	+£124 †	-£5 †	+£248 †	+£29 †	+£208 †	+£258 †

Model totals

Measure	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
gov_tax	+£3	+£144	-£29	+£241	+£73	+£208	+£239
household_tax	-£10	+£141	+£14	+£234	+£75	+£198	+£266
pre_budget_change_household_tax	-£9	+£138	+£11	+£234	+£75	+£198	+£230
gov_balance	+£20 †	+£124 †	-£5 †	+£248 †	+£29 †	+£208 †	+£258 †

Household income totals

Measure	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Household net income	-£20 †	-£124 †	+£5 †	-£248 †	-£29 †	-£208 †	-£258 †

Mean household net income in each side's own deciles

Measure	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Decile 2: mean household_net_income per household	0 †	0 †	+£0.00 †	0 †	0 †	0 †	0 †
Decile 3: mean household_net_income per household	+£0.00 †	-£0.00 †	+£0.00 †	+£0.00 †	+£0.00 †	+£0.00 †	+£0.00 †
Decile 4: mean household_net_income per household	+£0.00 †	+£0.00 †	+£0.00 †	+£0.00 †	+£0.00 †	+£0.00 †	-£0.00 †
Decile 5: mean household_net_income per household	+£0.00 †	-£0.00 †	-£0.00 †	-£0.00 †	-£0.00 †	-£0.00 †	+£0.00 †
Decile 6: mean household_net_income per household	+£0.00 †	+£0.00 †	+£0.00 †	-£0.00 †	+£0.00 †	+£0.00 †	+£0.00 †
Decile 7: mean household_net_income per household	+£0.00 †	-£0.00 †	+£0.00 †	-£0.00 †	-£0.00 †	-£0.00 †	-£0.00 †
Decile 8: mean household_net_income per household	+£0.00 †	-£0.00 †	+£0.00 †	-£0.00 †	+£0.00 †	-£0.00 †	-£0.00 †
Decile 9: mean household_net_income per household	-£0.00 †	-£0.00 †	+£0.00 †	-£0.00 †	-£0.00 †	-£0.00 †	-£0.00 †
Decile 10: mean household_net_income per household	-£0.00 †	-£0.00 †	-£0.00 †	-£0.00 †	-£0.00 †	-£0.00 †	-£0.00 †

Standard reform costings (change in gov_balance)

Measure	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Raise basic rate by 1pp	-£13	+£119	+£113	+£91	+£106	-£7	+£2
Raise higher rate by 1pp	-£8	-£40	+£14	+£16	-£75	+£9	+£12
Raise personal allowance by ~800GBP/year	+£5,588	+£794	+£11,578	-£5,816	+£1,966	+£17,159	+£1,640
Raise child benefit by 25GBP/week per additional child	-£0	-£0	-£0	-£1	-£0	+£0	+£1
Reduce Universal Credit taper rate to 20%	+£0	0	+£0	+£0	-£0	+£1	+£2
Raise Class 1 main employee NICs rate to 10%	+£0	+£1	-£5	-£2	-£0	+£4	+£4
Raise VAT standard rate by 2pp	-£20	-£4	-£11	+£11	-£2	+£1	+£65
Raise additional rate by 3pp	-£10	-£20	+£5	-£44	-£86	-£6	+£5
Raise the Universal Credit standard allowance by 10%	+£2	0	-£0	0	+£4	-£0	+£2
Raise the State Pension by 10%	-£1,511	-£2,048	-£3,114	+£1,643	+£7,283	+£4,671	-£264

Household net income by decile

Mean change in household net income per household, and as a share of the decile's base income; households stay in the base run's deciles.

Base decile	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Decile 1	0	0	0	0	0	0	0
Decile 2	0	0	fewer than 10 households change	0	0	0	0
Decile 3	0	0	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change
Decile 4	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change
Decile 5	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change
Decile 6	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change
Decile 7	fewer than 10 households change	fewer than 10 households change	fewer than 10 households change	0	0	fewer than 10 households change	0
Decile 8	0	0	0	0	0	0	0
Decile 9	0	0	0	0	0	0	0
Decile 10	0	0	0	0	0	0	0
all	0	0	0	0	0	0	0

Year	People gaining over £1	People losing over £1
2025-26	0.0%	0.0%
2026-27	0.0%	0.0%
2027-28	0.0%	0.0%
2028-29	0.0%	0.0%
2029-30	0.0%	0.0%
2030-31	0.0%	0.0%
2031-32	0.0%	0.0%

No change in any year: components the model counts twice; population; poverty rates; people in poverty; inequality; standard reforms: change in each reform's target.

Checks failing on both base and head (1)

• VAT is never negative (sign:vat): 2025-26: 76 units below zero, a weighted £-54,797,972 in total; 2026-27: 76 units below zero, a weighted £-56,271,349 in total; 2027-28: 76 units below zero, a weighted £-57,609,146 in total

Counted-once check

Each of 84 components was raised by £1 per unit in 2026-27, and every head of its totals was read household by household: its own head must rise by exactly £1, no other tax head may move, no other benefit may rise, and the model's own total must move by what its heads moved. A head that breaks a rule is measured again twice: with every other head held at its baseline value, and with every other head held at its value after the first £1 while the component rises again. It fails where either still shows the response. 0 failed; 0 were skipped.

• incapacity_benefit: pension_credit responds only through other heads in fewer than 10 households (other heads that moved there: carers_allowance; gov_spending; not a failure)
• incapacity_benefit: pension_credit responds only through other heads in fewer than 10 households (other heads that moved there: carers_allowance; household_benefits; not a failure)
• incapacity_benefit: universal_credit responds only through other heads in 72 households (other heads that moved there: carers_allowance, carer_support_payment; gov_spending; not a failure)
• incapacity_benefit: universal_credit responds only through other heads in 72 households (other heads that moved there: carers_allowance, carer_support_payment; household_benefits; not a failure)
• maternity_allowance: pension_credit responds only through other heads in fewer than 10 households (other heads that moved there: carers_allowance; gov_spending; not a failure)
• maternity_allowance: pension_credit responds only through other heads in fewer than 10 households (other heads that moved there: carers_allowance; household_benefits; not a failure)
• declared double count corporate_sdlt is still contained in expected_sdlt (coefficient 1.000; Corporate SDLT is counted twice in household and government tax totals #2159)

Provenance

Side	Commit	Runtime	Environment hash	Partition hash	Time
base	main 340bedbd85	uk 2.138.0 (files 8554ab6677bc), core 3.33.2, py 3.13.16 aarch64	1b05bc5b4e74	0d0426ee9e38	871.99s
head	#2433 merged into main 7927fd0d2e	uk 2.138.0 (files afb9a546e841), core 3.33.2, py 3.13.16 aarch64	1b05bc5b4e74	0d0426ee9e38	1300.22s

Dataset: hf://policyengine/policyengine-uk-data-private/enhanced_frs_2024_25.h5@2526edbbb687a3b54dbb11272e5389e4b62d2ac2, sha256 056e80fd8e9151d78f432a25cde863340baee81304c6216a37fb575ce8563784 (verified on both sides), policyengine-uk-data 1.58.1.

Receipts by tax head: head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Income tax	£298.30bn	£318.11bn	£335.36bn	£350.32bn	£365.75bn	£383.77bn	£402.05bn
National Insurance (employee and self-employed)	£52.58bn	£54.94bn	£56.75bn	£58.48bn	£60.51bn	£62.45bn	£64.90bn
National Insurance (employer)	£152.64bn	£159.18bn	£164.14bn	£168.73bn	£175.57bn	£181.08bn	£188.22bn
Employer NI change borne by capital	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Employer NI change borne by consumers	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Capital gains tax	£12.62bn	£13.06bn	£13.55bn	£14.04bn	£14.54bn	£15.09bn	£15.65bn
Student loan repayments	£7.83bn	£8.12bn	£8.35bn	£8.56bn	£8.79bn	£9.04bn	£9.38bn
VAT	£253.71bn	£260.53bn	£266.72bn	£273.14bn	£279.83bn	£286.71bn	£293.71bn
Change in VAT from its baseline	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
VAT on private school fees	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Fuel duties	£24.53bn	£24.64bn	£26.64bn	£26.69bn	£26.42bn	£25.76bn	£26.35bn
Alcohol duties	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Tobacco duties	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Vehicle excise duties	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
TV licence fee	£4.28bn	£4.43bn	£4.44bn	£4.46bn	£4.49bn	£4.51bn	£4.53bn
Council tax	£49.56bn	£52.45bn	£55.78bn	£59.39bn	£62.98bn	£66.74bn	£70.70bn
High value council tax surcharge	£0.00bn	£0.00bn	£0.00bn	£0.48bn	£0.50bn	£0.51bn	£0.52bn
Northern Ireland domestic rates	£0.55bn	£0.58bn	£0.61bn	£0.63bn	£0.67bn	£0.70bn	£0.73bn
Business rates	£31.73bn	£31.73bn	£31.73bn	£31.73bn	£31.73bn	£31.73bn	£31.73bn
Stamp duty land tax (own purchases, and corporate until the	£10.26bn	£10.84bn	£11.32bn	£11.80bn	£12.29bn	£12.83bn	£13.42bn
Land transaction tax (Wales)	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.01bn	£0.01bn
Land and buildings transaction tax (Scotland)	£0.01bn	£0.02bn	£0.02bn	£0.02bn	£0.02bn	£0.02bn	£0.02bn
Unspecified tax change borne by capital	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Unspecified tax change borne by consumers	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Wealth tax	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Wealth tax excluding the main residence	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Land value tax	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Carbon tax	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn

Spending by benefit and service: head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
State Pension	£122.50bn	£127.12bn	£128.28bn	£130.21bn	£134.05bn	£138.02bn	£142.08bn
Pension Credit	£6.68bn	£7.06bn	£7.04bn	£7.11bn	£7.23bn	£7.37bn	£7.46bn
Winter Fuel Payment	£1.70bn	£1.68bn	£1.59bn	£1.57bn	£1.57bn	£1.55bn	£1.52bn
Pension Age Winter Heating Payment (Scotland)	£0.19bn	£0.20bn	£0.20bn	£0.21bn	£0.21bn	£0.22bn	£0.22bn
Universal Credit	£79.17bn	£83.50bn	£85.32bn	£87.08bn	£88.02bn	£89.45bn	£90.80bn
Housing Benefit	£8.60bn	£8.93bn	£9.20bn	£9.34bn	£9.62bn	£9.88bn	£10.17bn
Council Tax Reduction	£1.99bn	£2.03bn	£2.08bn	£2.13bn	£2.18bn	£2.24bn	£2.29bn
Employment and Support Allowance (income-related)	£2.12bn	£2.18bn	£2.23bn	£2.28bn	£2.33bn	£2.39bn	£2.45bn
Employment and Support Allowance (contribution-based)	£5.22bn	£5.36bn	£5.49bn	£5.62bn	£5.76bn	£5.90bn	£6.04bn
Jobseeker's Allowance (income-based)	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Jobseeker's Allowance (contribution-based)	£0.29bn	£0.30bn	£0.30bn	£0.31bn	£0.32bn	£0.33bn	£0.33bn
Income Support	£0.12bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Working Tax Credit	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Child Tax Credit	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Incapacity Benefit	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Personal Independence Payment	£27.05bn	£28.19bn	£28.94bn	£29.64bn	£30.37bn	£31.11bn	£31.87bn
Disability Living Allowance	£7.52bn	£7.83bn	£8.04bn	£8.24bn	£8.44bn	£8.65bn	£8.86bn
Attendance Allowance	£8.71bn	£9.08bn	£9.32bn	£9.55bn	£9.78bn	£10.02bn	£10.26bn
Carer's Allowance	£4.50bn	£4.69bn	£4.81bn	£4.93bn	£5.05bn	£5.17bn	£5.29bn
Carer Support Payment (Scotland)	£0.35bn	£0.37bn	£0.38bn	£0.39bn	£0.40bn	£0.41bn	£0.41bn
Carer's Allowance Supplement (Scotland)	£0.00bn	£0.05bn	£0.05bn	£0.05bn	£0.05bn	£0.05bn	£0.05bn
Severe Disablement Allowance	£0.03bn	£0.03bn	£0.03bn	£0.03bn	£0.03bn	£0.03bn	£0.03bn
Industrial Injuries Disablement Benefit	£0.51bn	£0.52bn	£0.53bn	£0.54bn	£0.56bn	£0.57bn	£0.59bn
Armed Forces Compensation Scheme	£0.61bn	£0.62bn	£0.64bn	£0.65bn	£0.67bn	£0.69bn	£0.70bn
War Widow's or Widower's Pension	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Child Benefit	£16.23bn	£16.91bn	£17.32bn	£17.73bn	£18.16bn	£18.60bn	£19.04bn
Scottish Child Payment	£0.50bn	£0.52bn	£0.53bn	£0.55bn	£0.56bn	£0.57bn	£0.58bn
Two Child Limit Payment (Scotland, counterfactual)	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Healthy Start vouchers	£0.05bn	£0.05bn	£0.05bn	£0.05bn	£0.05bn	£0.05bn	£0.05bn
Maternity Allowance	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Statutory Maternity Pay	£3.32bn	£3.41bn	£3.49bn	£3.57bn	£3.66bn	£3.75bn	£3.84bn
Statutory Paternity Pay	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Statutory Sick Pay	£1.13bn	£1.16bn	£1.19bn	£1.22bn	£1.25bn	£1.28bn	£1.31bn
Sure Start Maternity Grant	£0.01bn	£0.01bn	£0.01bn	£0.01bn	£0.01bn	£0.01bn	£0.01bn
Bereavement Support Payment	£0.67bn	£0.69bn	£0.70bn	£0.72bn	£0.74bn	£0.76bn	£0.78bn
Tax-Free Childcare	£0.55bn	£0.56bn	£0.57bn	£0.58bn	£0.60bn	£0.61bn	£0.59bn
Extended childcare entitlement	£2.66bn	£3.14bn	£3.23bn	£3.30bn	£3.38bn	£3.47bn	£3.55bn
Universal childcare entitlement	£3.32bn	£3.59bn	£3.69bn	£3.78bn	£3.88bn	£3.99bn	£4.08bn
Targeted childcare entitlement	£0.57bn	£0.60bn	£0.62bn	£0.63bn	£0.65bn	£0.66bn	£0.67bn
Care to Learn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Childcare Grant	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Parents' Learning Allowance	£0.20bn	£0.20bn	£0.20bn	£0.20bn	£0.20bn	£0.20bn	£0.20bn
Adult Dependants' Grant	£0.06bn	£0.06bn	£0.04bn	£0.04bn	£0.04bn	£0.04bn	£0.04bn
Travel Grant	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Disabled Students' Allowance	suppressed	suppressed	suppressed	suppressed	suppressed	suppressed	suppressed
16 to 19 Bursary Fund	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
NHS spending	£204.68bn	£205.46bn	£206.22bn	£207.04bn	£207.96bn	£208.89bn	£209.79bn
State education spending	£0.02bn	£0.02bn	£0.02bn	£0.02bn	£0.02bn	£0.02bn	£0.02bn
Transport subsidy spending	£25.15bn	£25.25bn	£25.34bn	£25.44bn	£25.55bn	£25.67bn	£25.78bn
Cost-of-living support payment	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Energy Bills Rebate	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Energy Price Guarantee subsidy	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Basic income	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Disability basic income	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn
Other public spending budget change	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn

Caseloads: head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
State Pension	11,308k	11,208k	10,906k	10,812k	10,860k	10,908k	10,955k
Pension Credit	1,491k	1,489k	1,477k	1,455k	1,457k	1,454k	1,451k
Winter Fuel Payment	7,091k	7,008k	6,593k	6,509k	6,491k	6,377k	6,242k
Pension Age Winter Heating Payment (Scotland)	806k	807k	807k	805k	809k	812k	816k
Universal Credit	6,372k	6,379k	6,409k	6,420k	6,395k	6,387k	6,371k
Housing Benefit	1,254k	1,253k	1,254k	1,240k	1,245k	1,247k	1,249k
Council Tax Reduction	3,187k	3,212k	3,225k	3,247k	3,263k	3,282k	3,296k
Employment and Support Allowance (income-related)	187k	188k	188k	189k	190k	190k	191k
Employment and Support Allowance (contribution-based)	722k	724k	727k	730k	733k	737k	740k
Jobseeker's Allowance (income-based)	0k	0k	0k	0k	0k	0k	0k
Jobseeker's Allowance (contribution-based)	67k	67k	68k	68k	68k	69k	69k
Income Support	25k	0k	0k	0k	0k	0k	0k
Working Tax Credit	0k	0k	0k	0k	0k	0k	0k
Child Tax Credit	0k	0k	0k	0k	0k	0k	0k
Incapacity Benefit	0k	0k	0k	0k	0k	0k	0k
Personal Independence Payment	3,581k	3,595k	3,608k	3,623k	3,639k	3,655k	3,671k
Disability Living Allowance	1,296k	1,301k	1,306k	1,311k	1,317k	1,323k	1,329k
Attendance Allowance	1,701k	1,708k	1,714k	1,721k	1,729k	1,736k	1,744k
Carer's Allowance	1,038k	1,042k	1,046k	1,050k	1,055k	1,059k	1,064k
Carer Support Payment (Scotland)	81k	82k	82k	82k	83k	83k	83k
Carer's Allowance Supplement (Scotland)	0k	82k	82k	82k	83k	83k	83k
Severe Disablement Allowance	4k	4k	4k	4k	4k	4k	4k
Industrial Injuries Disablement Benefit	137k	138k	139k	139k	140k	140k	141k
Armed Forces Compensation Scheme	94k	94k	94k	95k	95k	95k	96k
War Widow's or Widower's Pension	0k	0k	0k	0k	0k	0k	0k
Child Benefit	8,136k	8,165k	8,185k	8,215k	8,249k	8,282k	8,314k
Scottish Child Payment	352k	354k	355k	356k	357k	358k	357k
Two Child Limit Payment (Scotland, counterfactual)	0k	0k	0k	0k	0k	0k	0k
Healthy Start vouchers	200k	201k	202k	203k	204k	204k	205k
Maternity Allowance	0k	0k	0k	0k	0k	0k	0k
Statutory Maternity Pay	334k	335k	336k	338k	339k	341k	342k
Statutory Paternity Pay	0k	0k	0k	0k	0k	0k	0k
Statutory Sick Pay	182k	183k	183k	184k	185k	186k	186k
Sure Start Maternity Grant	26k	26k	26k	27k	27k	27k	27k
Bereavement Support Payment	98k	98k	99k	99k	100k	100k	101k
Tax-Free Childcare	1,017k	1,028k	1,028k	1,033k	1,034k	1,038k	1,023k
Extended childcare entitlement	665k	671k	675k	677k	682k	686k	687k
Universal childcare entitlement	986k	989k	992k	997k	1,002k	1,013k	1,015k
Targeted childcare entitlement	119k	120k	120k	121k	121k	122k	121k
Care to Learn	0k	0k	0k	0k	0k	0k	0k
Childcare Grant	0k	0k	0k	0k	0k	0k	0k
Parents' Learning Allowance	98k	99k	99k	100k	100k	100k	101k
Adult Dependants' Grant	18k	18k	12k	13k	13k	13k	13k
Travel Grant	0k	0k	0k	0k	0k	0k	0k
Disabled Students' Allowance	suppressed	suppressed	suppressed	suppressed	suppressed	suppressed	suppressed
16 to 19 Bursary Fund	0k	0k	0k	0k	0k	0k	0k
Cost-of-living support payment	0k	0k	0k	0k	0k	0k	0k
Energy Bills Rebate	0k	0k	0k	0k	0k	0k	0k
Energy Price Guarantee subsidy	0k	0k	0k	0k	0k	0k	0k
Basic income	0k	0k	0k	0k	0k	0k	0k
Disability basic income	0k	0k	0k	0k	0k	0k	0k

Government balance, each component counted once: head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Government receipts, each component once	£898.60bn	£938.62bn	£975.41bn	£1,008.49bn	£1,044.08bn	£1,080.93bn	£1,121.92bn
Government spending	£537.00bn †	£551.36bn †	£557.71bn †	£564.79bn †	£573.36bn †	£582.62bn †	£591.80bn †
Government balance, each receipt once	£361.60bn †	£387.26bn †	£417.70bn †	£443.70bn †	£470.73bn †	£498.30bn †	£530.12bn †
Benefits in household_benefits but not in gov_spending	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn	£0.00bn

Model totals: head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
gov_tax	£901.73bn	£941.75bn	£978.54bn	£1,011.62bn	£1,047.21bn	£1,084.06bn	£1,125.05bn
household_tax	£495.38bn	£522.04bn	£547.68bn	£569.74bn	£591.81bn	£616.26bn	£643.12bn
pre_budget_change_household_tax	£487.56bn	£513.92bn	£539.33bn	£560.70bn	£582.53bn	£606.72bn	£633.22bn
gov_spending	£537.00bn †	£551.36bn †	£557.71bn †	£564.79bn †	£573.36bn †	£582.62bn †	£591.80bn †
household_benefits	£537.00bn †	£551.36bn †	£557.71bn †	£564.79bn †	£573.36bn †	£582.62bn †	£591.80bn †
gov_balance	£364.73bn †	£390.39bn †	£420.83bn †	£446.83bn †	£473.86bn †	£501.43bn †	£533.25bn †

Components the model counts twice: head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
corporate_sdlt, counted again inside expected_sdlt	£3.13bn	£3.13bn	£3.13bn	£3.13bn	£3.13bn	£3.13bn	£3.13bn

Household income totals: head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Household market income	£1,657.06bn	£1,719.25bn	£1,771.68bn	£1,821.99bn	£1,887.41bn	£1,945.59bn	£2,017.37bn
Household net income	£1,659.41bn †	£1,707.82bn †	£1,739.83bn †	£1,774.09bn †	£1,810.35bn †	£1,852.01bn †	£1,903.61bn †
Household net income (HBAI definition)	£1,468.17bn	£1,514.88bn	£1,547.36bn	£1,580.55bn	£1,614.82bn	£1,654.01bn	£1,704.49bn

Population: head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
People	69,514k	69,778k	70,036k	70,316k	70,626k	70,944k	71,249k
Benefit units	35,247k	35,381k	35,512k	35,654k	35,811k	35,972k	36,127k
Households	31,167k	31,285k	31,401k	31,526k	31,665k	31,808k	31,944k

Poverty rates: head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Absolute poverty, before housing costs: everyone	15.9%	14.9%	15.5%	15.6%	15.7%	15.8%	15.7%
Absolute poverty, before housing costs: children	23.7%	20.9%	21.6%	21.4%	21.6%	21.8%	21.7%
Absolute poverty, before housing costs: working-age adults	13.8%	13.4%	14.0%	14.1%	14.2%	14.3%	14.3%
Absolute poverty, before housing costs: pensioners	13.6%	13.1%	13.2%	13.4%	13.5%	13.6%	13.5%
Absolute poverty, after housing costs: everyone	20.9%	20.4%	21.0%	21.2%	21.4%	21.7%	21.8%
Absolute poverty, after housing costs: children	31.8%	30.0%	30.7%	31.0%	31.2%	31.6%	31.8%
Absolute poverty, after housing costs: working-age adults	19.4%	19.2%	20.0%	20.2%	20.5%	20.7%	20.8%
Absolute poverty, after housing costs: pensioners	12.5%	12.2%	12.0%	12.2%	12.2%	12.3%	12.3%
Relative poverty, before housing costs: everyone	17.0%	16.4%	16.5%	16.6%	16.8%	16.8%	16.9%
Relative poverty, before housing costs: children	25.7%	23.5%	23.3%	23.2%	23.4%	23.5%	23.7%
Relative poverty, before housing costs: working-age adults	14.5%	14.4%	14.7%	14.8%	15.1%	15.1%	15.2%
Relative poverty, before housing costs: pensioners	14.8%	14.9%	14.4%	14.4%	14.3%	14.4%	14.6%
Relative poverty, after housing costs: everyone	21.5%	21.1%	21.3%	21.4%	21.5%	21.6%	21.8%
Relative poverty, after housing costs: children	32.6%	31.3%	31.1%	31.1%	31.4%	31.4%	31.8%
Relative poverty, after housing costs: working-age adults	19.8%	19.8%	20.2%	20.3%	20.5%	20.7%	20.8%
Relative poverty, after housing costs: pensioners	13.3%	12.8%	12.6%	12.7%	12.3%	12.2%	12.3%

People in poverty: head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Absolute poverty, before housing costs: everyone	11,050k	10,426k	10,847k	10,945k	11,075k	11,205k	11,215k
Absolute poverty, before housing costs: children	3,559k	3,140k	3,260k	3,252k	3,297k	3,333k	3,333k
Absolute poverty, before housing costs: working-age adults	5,864k	5,737k	6,070k	6,164k	6,236k	6,314k	6,319k
Absolute poverty, before housing costs: pensioners	1,627k	1,549k	1,517k	1,528k	1,542k	1,558k	1,563k
Absolute poverty, after housing costs: everyone	14,536k	14,210k	14,688k	14,922k	15,145k	15,380k	15,517k
Absolute poverty, after housing costs: children	4,765k	4,513k	4,641k	4,697k	4,753k	4,831k	4,894k
Absolute poverty, after housing costs: working-age adults	8,275k	8,251k	8,665k	8,836k	8,991k	9,138k	9,200k
Absolute poverty, after housing costs: pensioners	1,496k	1,445k	1,382k	1,389k	1,401k	1,411k	1,423k
Relative poverty, before housing costs: everyone	11,807k	11,456k	11,570k	11,652k	11,832k	11,919k	12,065k
Relative poverty, before housing costs: children	3,863k	3,538k	3,520k	3,528k	3,567k	3,592k	3,642k
Relative poverty, before housing costs: working-age adults	6,178k	6,160k	6,389k	6,483k	6,623k	6,674k	6,741k
Relative poverty, before housing costs: pensioners	1,767k	1,758k	1,661k	1,642k	1,642k	1,653k	1,682k
Relative poverty, after housing costs: everyone	14,918k	14,717k	14,897k	15,056k	15,215k	15,345k	15,518k
Relative poverty, after housing costs: children	4,886k	4,714k	4,695k	4,721k	4,789k	4,814k	4,894k
Relative poverty, after housing costs: working-age adults	8,442k	8,497k	8,756k	8,884k	9,018k	9,123k	9,201k
Relative poverty, after housing costs: pensioners	1,590k	1,507k	1,446k	1,451k	1,408k	1,408k	1,423k

Inequality: head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Gini coefficient, equivalised HBAI income before housing costs	0.3076	0.3053	0.3067	0.3074	0.3079	0.3086	0.3096

Mean household net income in each side's own deciles: head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Decile 1: mean household_net_income per household	£17,703 †	£17,992 †	£17,936 †	£18,011 †	£18,318 †	£18,513 †	£18,674 †
Decile 2: mean household_net_income per household	£28,348 †	£29,017 †	£28,655 †	£28,970 †	£29,308 †	£29,678 †	£30,275 †
Decile 3: mean household_net_income per household	£34,599 †	£35,849 †	£36,522 †	£37,006 †	£37,361 †	£38,078 †	£38,727 †
Decile 4: mean household_net_income per household	£39,341 †	£40,988 †	£41,881 †	£42,614 †	£43,169 †	£43,763 †	£44,893 †
Decile 5: mean household_net_income per household	£44,542 †	£46,026 †	£46,958 †	£47,586 †	£48,343 †	£49,291 †	£49,916 †
Decile 6: mean household_net_income per household	£48,357 †	£49,456 †	£50,387 †	£51,215 †	£52,336 †	£53,141 †	£54,599 †
Decile 7: mean household_net_income per household	£56,416 †	£57,582 †	£58,485 †	£59,450 †	£60,073 †	£61,473 †	£63,079 †
Decile 8: mean household_net_income per household	£69,296 †	£70,502 †	£71,718 †	£73,044 †	£74,365 †	£75,837 †	£77,619 †
Decile 9: mean household_net_income per household	£79,710 †	£82,067 †	£83,315 †	£84,464 †	£86,264 †	£87,817 †	£90,044 †
Decile 10: mean household_net_income per household	£117,836 †	£120,656 †	£122,579 †	£124,731 †	£127,216 †	£129,852 †	£132,997 †

Standard reform costings (change in gov_balance): head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Raise basic rate by 1pp	£6.22bn	£6.50bn	£6.71bn	£6.90bn	£7.11bn	£7.35bn	£7.62bn
Raise higher rate by 1pp	£3.54bn	£3.82bn	£4.05bn	£4.27bn	£4.49bn	£4.76bn	£4.96bn
Raise personal allowance by ~800GBP/year	£-3.84bn	£-3.98bn	£-4.06bn	£-4.11bn	£-4.20bn	£-4.32bn	£-2.04bn
Raise child benefit by 25GBP/week per additional child	£-2.00bn	£-1.76bn	£-1.64bn	£-1.54bn	£-1.44bn	£-1.34bn	£-1.24bn
Reduce Universal Credit taper rate to 20%	£-20.54bn	£-21.10bn	£-21.45bn	£-21.88bn	£-21.96bn	£-22.33bn	£-22.81bn
Raise Class 1 main employee NICs rate to 10%	£11.06bn	£11.51bn	£11.83bn	£12.14bn	£12.46bn	£12.80bn	£13.27bn
Raise VAT standard rate by 2pp	£25.01bn	£25.68bn	£26.29bn	£26.92bn	£27.58bn	£28.26bn	£28.95bn
Raise additional rate by 3pp	£2.83bn	£3.07bn	£3.26bn	£3.46bn	£3.66bn	£3.89bn	£4.21bn
Raise the Universal Credit standard allowance by 10%	£-3.04bn	£-3.17bn	£-3.25bn	£-3.32bn	£-3.37bn	£-3.43bn	£-3.47bn
Raise the State Pension by 10%	£-8.93bn	£-9.14bn	£-9.06bn	£-9.12bn	£-9.31bn	£-9.55bn	£-9.82bn

Standard reforms: change in each reform's target: head levels

Measure (head)	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Raise basic rate by 1pp: change in income_tax	£6.36bn	£6.65bn	£6.87bn	£7.07bn	£7.29bn	£7.53bn	£7.81bn
Raise higher rate by 1pp: change in income_tax	£3.54bn	£3.83bn	£4.06bn	£4.28bn	£4.50bn	£4.77bn	£4.97bn
Raise personal allowance by ~800GBP/year: change in income_tax	£-3.97bn	£-4.12bn	£-4.22bn	£-4.27bn	£-4.36bn	£-4.48bn	£-1.79bn
Raise child benefit by 25GBP/week per additional child: change in child_benefit	£2.34bn	£2.15bn	£2.03bn	£1.92bn	£1.82bn	£1.71bn	£1.59bn
Reduce Universal Credit taper rate to 20%: change in universal_credit	£20.53bn	£21.09bn	£21.44bn	£21.87bn	£21.95bn	£22.32bn	£22.80bn
Raise Class 1 main employee NICs rate to 10%: change in national_insurance	£11.33bn	£11.79bn	£12.13bn	£12.44bn	£12.77bn	£13.12bn	£13.61bn
Raise VAT standard rate by 2pp: change in vat	£25.01bn	£25.68bn	£26.29bn	£26.92bn	£27.58bn	£28.26bn	£28.95bn
Raise additional rate by 3pp: change in income_tax	£2.83bn	£3.07bn	£3.26bn	£3.46bn	£3.66bn	£3.89bn	£4.21bn
Raise the Universal Credit standard allowance by 10%: change in universal_credit	£3.04bn	£3.17bn	£3.25bn	£3.32bn	£3.38bn	£3.43bn	£3.48bn
Raise the State Pension by 10%: change in state_pension	£12.25bn	£12.71bn	£12.83bn	£13.02bn	£13.41bn	£13.80bn	£14.21bn