Apply the Pension Credit earnings disregards (SPC Regs 2002 Sch VI)

.github/workflows/test-suite.yaml

@@ -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

changelog.d/pc-earnings-disregard.fixed.md

@@ -0,0 +1 @@
+Apply the Pension Credit earnings disregards of SPC Regs 2002 Schedule VI: 20 pounds a week for lone parents, carers and claimants or partners on a listed disability benefit (including working tax credit with a disability element) or certified blind, otherwise 5 pounds (single) or 10 pounds (couple), capped at net earnings. Employed earnings are net of the income tax they add; self-employed earnings, in Pension Credit income too, are net of the notional tax and contributions of the Computation of Earnings Regulations 1996 reg. 14. The Housing Benefit savings-credit-only route now deducts only the higher Housing Benefit disregards.

changelog.d/pc-earnings-tax-reuse.changed.md

@@ -0,0 +1 @@
+- Reuse Pension Credit earnings tax calculations when checking Universal Credit housing contribution exemptions.

policyengine_uk/parameters/gov/dwp/pension_credit/earnings_disregard/higher/amount.yaml

@@ -0,0 +1,10 @@
+description: Weekly earnings disregarded from Pension Credit income for a lone parent, a carer, or a claimant or partner on a listed disability benefit or certified blind. It is the most that can be disregarded however many conditions are met.
+values:
+  2003-10-06: 20
+metadata:
+  unit: currency-GBP
+  period: week
+  label: Pension Credit higher earnings disregard
+  reference:
+    - title: The State Pension Credit Regulations 2002 Sch. VI paras. 1, 3, 4 and 4A
+      href: https://www.legislation.gov.uk/uksi/2002/1792/schedule/VI

policyengine_uk/parameters/gov/dwp/pension_credit/earnings_disregard/higher/disability_benefit_unit_benefits.yaml

@@ -0,0 +1,19 @@
+description: >
+  Benefit-unit awards whose receipt qualifies the benefit unit for the higher
+  Pension Credit earnings disregard (Sch. VI para. 4(1)(a)(vii), employment
+  and support allowance, from 27 October 2008). The model holds income-related
+  employment and support allowance on the benefit unit, as the claimant's
+  award; contributory employment and support allowance is a person-level
+  benefit in `disability_benefits`.
+metadata:
+  label: Pension Credit higher earnings disregard benefit-unit disability benefits
+  unit: list
+  reference:
+    - title: The State Pension Credit Regulations 2002 Sch. VI para. 4(1)(a)(vii)
+      href: https://www.legislation.gov.uk/uksi/2002/1792/schedule/VI/paragraph/4
+    - title: The Employment and Support Allowance (Consequential Provisions) (No. 2) Regulations 2008 reg. 4(10)(a)(ii)
+      href: https://www.legislation.gov.uk/uksi/2008/1554/regulation/4
+values:
+  2003-10-06: []
+  2008-10-27:
+    - esa_income

policyengine_uk/parameters/gov/dwp/pension_credit/earnings_disregard/higher/disability_benefits.yaml

@@ -0,0 +1,46 @@
+description: >
+  Person-level benefits whose receipt by the claimant or partner qualifies the
+  benefit unit for the higher Pension Credit earnings disregard (Sch. VI para.
+  4(1)(a)). Income-related employment and support allowance, a benefit-unit
+  award, is in `disability_benefit_unit_benefits`.
+  `incapacity_benefit` stands for long-term incapacity benefit (para.
+  4(1)(a)(i)); the model does not separate the short-term rates. Not modelled:
+  the war pensions mobility supplement (v), which has no variable; pension age
+  disability payment (iiia, from 21 October 2024), Scottish adult disability
+  living allowance (iva, from 21 March 2025) and adult disability payment
+  (viiia, from 21 March 2022), which have no separate variables. Working tax
+  credit with its disability or severe disability element (vi) is a
+  benefit-unit award, tested in the formula of
+  `pension_credit_earnings_disregard`.
+metadata:
+  label: Pension Credit higher earnings disregard disability benefits
+  unit: list
+  reference:
+    - title: The State Pension Credit Regulations 2002 Sch. VI para. 4(1)(a)
+      href: https://www.legislation.gov.uk/uksi/2002/1792/schedule/VI/paragraph/4
+    - title: The Employment and Support Allowance (Consequential Provisions) (No. 2) Regulations 2008 reg. 4(10)(a)(ii) (ESA, from 27 October 2008)
+      href: https://www.legislation.gov.uk/uksi/2008/1554/regulation/4
+    - title: The Personal Independence Payment (Supplementary Provisions and Consequential Amendments) Regulations 2013 Sch. para. 27(8)(b) (PIP, from 8 April 2013)
+      href: https://www.legislation.gov.uk/uksi/2013/388/schedule/paragraph/27
+    - title: "The Armed Forces and Reserve Forces Compensation Scheme (Consequential Provisions: Subordinate Legislation) Order 2013 Sch. para. 23(8)(b) (AFIP, from 8 April 2013)"
+      href: https://www.legislation.gov.uk/uksi/2013/591/schedule/paragraph/23
+values:
+  2003-10-06:
+    - incapacity_benefit
+    - sda
+    - attendance_allowance
+    - dla
+  2008-10-27:
+    - incapacity_benefit
+    - sda
+    - attendance_allowance
+    - dla
+    - esa_contrib
+  2013-04-08:
+    - incapacity_benefit
+    - sda
+    - attendance_allowance
+    - dla
+    - esa_contrib
+    - pip
+    - armed_forces_independence_payment

policyengine_uk/parameters/gov/dwp/pension_credit/earnings_disregard/standard.yaml

@@ -0,0 +1,20 @@
+description: Weekly earnings disregarded from Pension Credit income where neither the claimant nor a partner qualifies for the higher disregard.
+SINGLE:
+  values:
+    2003-10-06: 5
+  metadata:
+    label: Pension Credit standard earnings disregard (single)
+COUPLE:
+  values:
+    2003-10-06: 10
+  metadata:
+    label: Pension Credit standard earnings disregard (couple)
+metadata:
+  unit: currency-GBP
+  period: week
+  propagate_metadata_to_children: true
+  reference:
+    - title: The State Pension Credit Regulations 2002 Sch. VI para. 5
+      href: https://www.legislation.gov.uk/uksi/2002/1792/schedule/VI/paragraph/5
+    - title: The State Pension Credit Regulations 2002 reg. 17(9)
+      href: https://www.legislation.gov.uk/uksi/2002/1792/regulation/17

policyengine_uk/tests/policy/baseline/finance/benefit/family/housing_benefit/housing_benefit_savings_credit_only.yaml

@@ -141,8 +141,9 @@
     pension_credit_assessable_capital: [20_000, 0]
     # 18,000 + 1,040 = 19,040, above the couple minimum guarantee of 18,889.
     # The non-dependant's is computed but he cannot have Pension Credit:
-    # 20,000 - 1,486 income tax - 594.40 National Insurance = 17,919.60.
-    pension_credit_income: [19_040, 17_919.60]
+    # 20,000 - 1,486 income tax - 594.40 National Insurance - the 5 pound
+    # earnings disregard (260) = 17,659.60.
+    pension_credit_income: [19_040, 17_659.60]
     guarantee_credit: [0, 0]
     # 1,045.20 - 0.4 x (19,040 - 18,889) = 1,045.20 - 60.40 = 984.80.
     savings_credit: [984.80, 0]
@@ -169,9 +170,8 @@
         members: [person1]
         # £5 a week for a single claimant with earnings (Sch 4 para 7(a)),
         # the same as the Pension Credit disregard (SPC Regs 2002 Sch VI
-        # para 5(a)); 5 x 52 = 260. Pension Credit income in the model
-        # disregards no earnings, so deducting it gives the Secretary of
-        # State's figure.
+        # para 5(a)); 5 x 52 = 260. The Secretary of State's figure is
+        # already after it, and reg 27(4) deducts only higher amounts.
         housing_benefit_applicable_income_disregard: 260
     households:
       household:
@@ -180,14 +180,15 @@
         tenure_type: RENT_FROM_COUNCIL
         savings: 0
   output:
-    # 13,000 - 86 = 12,914, as in case 1.
-    pension_credit_income: 12_914
-    savings_credit: 718.62
+    # 13,000 - 86 - the 5 pound Pension Credit earnings disregard (260).
+    pension_credit_income: 12_654
+    # 933.82 - 0.4 x (12,654 - 12,376) = 933.82 - 111.20 = 822.62.
+    savings_credit: 822.62
     in_receipt_of_savings_credit_only: true
-    # 12,914 + 718.62 - 260 = 13,372.62.
-    housing_benefit_applicable_income: 13_372.62
-    # 7,800 - 0.65 x (13,372.62 - 13,312) = 7,800 - 39.40 = 7,760.60.
-    housing_benefit: 7_760.60
+    # 12,654 + 822.62 = 13,476.62; nothing more is disregarded.
+    housing_benefit_applicable_income: 13_476.62
+    # 7,800 - 0.65 x (13,476.62 - 13,312) = 7,800 - 107.00 = 7,693.00.
+    housing_benefit: 7_693
 
 - name: Case 5, savings credit only lone parent in work, childcare charges and the lone parent and additional earnings disregards are deducted.
   period: 2026
@@ -196,7 +197,7 @@
     people:
       person1:
         age: 78
-        state_pension: 11_000
+        state_pension: 12_500
         employment_income: 7_000
         # 20 hours a week, so remunerative work (reg 6) and the reg 31
         # condition for deducting childcare charges are met.
@@ -207,13 +208,10 @@
     benunits:
       benunit:
         members: [person1, person2]
-        # Reg 27(4)(c)(i): the higher amount disregarded for a lone parent's
-        # earnings, £25 a week (Sch 4 para 2) against Pension Credit's £20
-        # (SPC Regs 2002 Sch VI para 1); and (d): the additional £17.10 (Sch
-        # 4 para 9(1)) for a lone parent working 16 hours or more whose net
-        # earnings cover the disregards and childcare. Pension Credit income
-        # in the model disregards no earnings, so the whole of both is
-        # deducted: (25 + 17.10) x 52 = 2,189.20, the value #1908 gives.
+        # The lone parent's £25 a week (Sch 4 para 2) and the additional
+        # £17.10 (Sch 4 para 9(1)) for a lone parent working 16 hours or more
+        # whose net earnings cover the disregards and childcare:
+        # (25 + 17.10) x 52 = 2,189.20, the value #1908 gives.
         housing_benefit_applicable_income_disregard: 2_189.20
     households:
       household:
@@ -222,20 +220,57 @@
         tenure_type: RENT_FROM_COUNCIL
         savings: 0
   output:
-    # (18,000 - 12,570) x 0.2 = 1,086; 18,000 - 1,086 = 16,914.
-    pension_credit_income: 16_914
+    # The lone parent's 20 pound Pension Credit disregard (SPC Regs 2002 Sch
+    # VI para 1): 20 x 52 = 1,040.
+    pension_credit_earnings_disregard: 1_040
+    # (19,500 - 12,570) x 0.2 = 1,386; 19,500 - 1,386 - 1,040 = 17,074.
+    pension_credit_income: 17_074
     # 12,376 + 3,638.96 = 16,014.96.
     minimum_guarantee: 16_014.96
     guarantee_credit: 0
-    # 933.82 - 0.4 x (16,914 - 16,014.96) = 933.82 - 359.62 = 574.20.
-    savings_credit: 574.20
+    # 933.82 - 0.4 x (17,074 - 16,014.96) = 933.82 - 423.62 = 510.20.
+    savings_credit: 510.20
     in_receipt_of_savings_credit_only: true
     # Reg 27(4)(b): 2,600 of childcare (£50 a week), below the weekly
     # maximum and the earnings.
     housing_benefit_applicable_income_childcare_element: 2_600
-    # 16,914 + 574.20 - 2,600 - 2,189.20 = 12,699.
-    housing_benefit_savings_credit_only_income: 12_699
-    housing_benefit_applicable_income: 12_699
+    # Reg 27(4)(c)(i): the higher amount for a lone parent's earnings,
+    # 1,300 - 1,040 = 260; (d): the additional 17.10 x 52 = 889.20.
+    # 17,074 + 510.20 - 2,600 - 260 - 889.20 = 13,835.
+    housing_benefit_savings_credit_only_income: 13_835
+    housing_benefit_applicable_income: 13_835
+
+- name: Case 5a, the same lone parent with less State Pension, whose 20 pound Pension Credit disregard brings a guarantee credit and its passport.
+  period: 2026
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 78
+        state_pension: 11_000
+        employment_income: 7_000
+        hours_worked: 1_040
+      person2:
+        age: 8
+        childcare_expenses: 2_600
+    benunits:
+      benunit:
+        members: [person1, person2]
+        housing_benefit_applicable_income_disregard: 2_189.20
+    households:
+      household:
+        members: [person1, person2]
+        rent: 7_800
+        tenure_type: RENT_FROM_COUNCIL
+        savings: 0
+  output:
+    # (18,000 - 12,570) x 0.2 = 1,086; 18,000 - 1,086 - 1,040 = 15,874.
+    pension_credit_income: 15_874
+    # 16,014.96 - 15,874 = 140.96.
+    guarantee_credit: 140.96
+    in_receipt_of_savings_credit_only: false
+    # The guarantee credit passports the maximum Housing Benefit: the rent.
+    housing_benefit: 7_800
 
 - name: Case 6, guarantee credit and savings credit together, the award is not savings credit only and the guarantee credit passport applies.
   period: 2026

policyengine_uk/tests/policy/baseline/gov/dwp/pension_credit/claimant_partner_income_and_carers.yaml

@@ -160,9 +160,13 @@
     is_claimant_or_partner: [true, true]
     # SPCA 2002 s.5: gross = 5,000 + 1,000 + 100 + 2,000 + 500 + 200
     # + 104 = 8,904; deductions = 100 + 50 + 25 + 50% * 300 = 325.
-    pension_credit_income: 8_579
+    # Sch VI para 3 (both carers): 20 pounds a week, capped at net earnings
+    # (claimant 1,000 - 100 tax - 100 half contributions = 800; partner
+    # 500 - 25 NI - 50 tax - 50 = 375; 1,175), so 1,040 is disregarded:
+    # 8,904 - 325 - 1,040.
+    pension_credit_income: 7_539
     # Reg.9: remove the claimant's 100 JSA and partner's 200 ESA.
-    savings_credit_income: 8_279
+    savings_credit_income: 7_239
     # Sch.I para.4 and the 2026 carer addition: 2 * 48.15 * 52 = 5,007.60.
     carer_minimum_guarantee_addition: 5_007.60
 

policyengine_uk/tests/policy/baseline/gov/dwp/pension_credit/guarantee_credit/child_amount_tax_credit_award.yaml

@@ -39,12 +39,11 @@
 # credit (SPCA 2002 s.3(1)(a)). The 2018-19 and 2019-20 couples have no
 # income, so no savings credit either. The Housing Benefit cases' couple is
 # aged 80, so savings credit applies to it. The grandchild is 10 (11 in
-# 2025-26), born before 6 April 2017. Pension Credit earnings are entered net
-# of the SPC Regs Sch VI para 5 disregard (£10 a week for a couple), which
-# the model does not apply. £10,000 of savings gives no Pension Credit tariff
-# income, and £300 of interest uses up the £300 step-one disregard of tax
-# credit income (SI 2002/2006 reg 3). No one pays income tax or National
-# Insurance.
+# 2025-26), born before 6 April 2017. Employment income is gross: the model
+# applies the SPC Regs Sch VI para 5 disregard (£10 a week for a couple)
+# once. £10,000 of savings gives no Pension Credit tariff income, and £300
+# of interest uses up the £300 step-one disregard of tax credit income
+# (SI 2002/2006 reg 3). No one pays income tax or National Insurance.
 
 - name: A Pension Credit couple awarded CTC and WTC gets no child amount
   # Tax credit income: State Pension 8,000 + interest (300 - 300) + earnings
@@ -83,7 +82,7 @@
       benunit:
         members: [grandparent_1, grandparent_2, grandchild]
         would_claim_uc: false
-        pension_credit_earnings: 2_080  # 2,600 - 10 x 52
+        # Gross wages are 2,600; Sch VI deducts 10 x 52, leaving 2,080.
         CTC_family_element: 545
     households:
       household:
@@ -125,7 +124,7 @@
       benunit:
         members: [grandparent_1, grandparent_2, grandchild]
         would_claim_uc: false
-        pension_credit_earnings: 2_080
+        # Gross wages are 2,600; Sch VI deducts 520, leaving 2,080 once.
     households:
       household:
         members: [grandparent_1, grandparent_2, grandchild]
@@ -166,7 +165,7 @@
       benunit:
         members: [grandparent_1, grandparent_2, grandchild]
         would_claim_uc: false
-        pension_credit_earnings: 2_080
+        # As in the first case, gross wages 2,600 become 2,080 after Sch VI.
     households:
       household:
         members: [grandparent_1, grandparent_2, grandchild]
@@ -213,7 +212,7 @@
       benunit:
         members: [grandparent_1, grandparent_2, grandchild]
         would_claim_uc: false
-        pension_credit_earnings: 2_980  # 3,500 - 10 x 52
+        # Gross wages 3,500 become 2,980 after Sch VI, even with no PC paid.
     households:
       household:
         members: [grandparent_1, grandparent_2, grandchild]
@@ -254,7 +253,7 @@
       benunit:
         members: [grandparent_1, grandparent_2, grandchild]
         would_claim_uc: false
-        pension_credit_earnings: 2_080
+        # Gross wages 2,600 less one Sch VI disregard of 520 give 2,080.
         has_tax_credit_award: true
     households:
       household:
@@ -407,7 +406,7 @@
       benunit:
         members: [grandparent_1, grandparent_2, grandchild]
         would_claim_uc: false
-        pension_credit_earnings: 2_080
+        # Tax-credit closure does not alter gross wages 2,600 less Sch VI 520.
         standard_minimum_guarantee: 18_023.20  # 346.60 x 52
         would_claim_uc_at_legacy_closure: false
     households: