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Limit Income Tax reductions to the Step 5 tax so they don't offset Step 7 charges - #2545

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Limit Income Tax reductions to the Step 5 tax so they don't offset Step 7 charges#2545
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@MaxGhenis MaxGhenis commented Oct 20, 2026 •
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Fixes #2544

Reproducer: policyengine_uk/tests/policy/baseline/gov/hmrc/income_tax/step_6_step_7.yaml, policyengine_uk/tests/test_income_tax_step_6_step_7_properties.py::test_the_fix_restores_exactly_the_charges_the_old_netting_offset

axiom: uk:statutes/ukpga/2007/3/23#income_tax_liability encoded-correct (companion case no_personal_allowance_and_reductions_cannot_make_tax_left_negative in uk/statutes/ukpga/2007/3/23.test.yaml: reductions of £800 against £500 of tax leave the £20 of s. 30 tax)

Lands after #2066 (winter fuel payment charge): this PR is rebased onto it once it merges, as set out below.

The bug

income_tax returned max_(0, additions - subtractions). income_tax_additions held the Step 5 tax together with two Step 7 charges (CB_HITC, personal_pension_contributions_tax), so any Step 6 reduction above the Step 5 tax offset those charges. Separately, capped_mcad was capped at income_tax_pre_charges + CB_HITC.

ITA 2007 s. 23 deducts the tax reductions at Step 6 "from the amount of tax calculated at Step 5", and adds the s. 30 amounts at Step 7 "to the amount of tax left after Step 6".

  • s. 29(2) allows a reduction "only so far as there is sufficient tax calculated at Step 5", and s. 29(3) counts the reductions already deducted.
  • s. 30(1) lists the high income child benefit charge and the s. 227 FA 2004 annual allowance charge.
  • s. 27(5) deducts the VCT, EIS, SEIS, social investment, community investment and maintenance reductions before the married couple's allowance.

On main (76cfc9e), for 2026-27, from the new YAML cases:

Case Main This PR (the law)
£100,000 pay, £50,000 of other_tax_credits, one child (HICBC £1,406) income tax £0 £1,406
The same pay with £27,200 of VCT relief and a £436 MCA reduction, HICBC £1,406 capped_mcad £436 £232 (and income tax £1,406, not £1,202)
£100,000 pay, £70,000 employer pension contributions (AA charge £4,000), £30,000 of other_tax_credits income tax £1,432 £4,000
£90,000 pay, £10,000 of property profits and receipts, £2,000 finance costs, £27,200 of other_tax_credits, HICBC £1,406 income tax £1,238 (the property allowance route nets £168 of excess credits against the HICBC) £1,406 on either route

Changes

  • Parameters. income_tax_additions and income_tax_subtractions are replaced by three explicit lists, with references to ss. 23, 26, 29 and 30:
    • gov.hmrc.income_tax.step_5_tax_components (the four rate taxes, now what income_tax_pre_charges adds);
    • step_6_tax_reductions (same contents as the old subtractions);
    • step_7_additional_tax (CB_HITC, personal_pension_contributions_tax).
  • New variables.
    • income_tax_reductions: the Step 6 deduction, the listed reductions (each with its own caps) limited in total to the Step 5 tax.
    • income_tax_charges: the Step 7 list.
    • income_tax = max(0, Step 5 − Step 6) + Step 7.
  • capped_mcad is capped at the Step 5 tax left after other_tax_credits (s. 27(5)). Foreign tax relief, also in other_tax_credits, should come after the MCA (s. 27(6)); the order changes the split, not the total.
  • Kept working.
    • property_finance_cost_relief and utils/uc_income_tax.py read the renamed Step 6 list. For a given property allowance route their values are unchanged, which the differential test checks for the finance-cost relief. The election itself compares income tax on the two routes, so it can now choose differently. In the last table row, main takes the allowance route (Step 5 £27,032, no finance-cost reduction) because the old netting made it £168 cheaper. Under the fix both routes cost £1,406, and the model takes the other one (Step 5 £27,432, finance-cost reduction £232).
    • The Conservative household-based HICBC reform replaces CB_HITC, which stays on the Step 7 list.
    • No reform or contrib parameter appended to the old lists (rg across policyengine_uk/).
  • Documented limitation. other_tax_credits lumps VCT, EIS, SEIS, CITR, SITR, maintenance and foreign tax relief, so the s. 29(4A)–(4C) cap (the Step 5 tax less the Gift Aid tax treated as deducted under s. 414) can't be applied. It's documented on other_tax_credits and income_tax_reductions.
  • fiscal_partition.yaml lists the two new variables as components of the income_tax head.
  • Intended test change. is_allowance_eligible.yaml's "Capped Married Couples' Allowance Deduction" case pinned the old cap: an £800 reduction against £500 of Step 5 tax and a £200 HICBC was capped at £700. It now expects £500 (s. 29(2)), with income tax of £200.
  • Changelog: 2544.fixed.md, and 2544.removed.md for the removed parameter names.

Invariants (stated and tested)

For every input, test_income_tax_step_6_step_7_properties.py checks, over Hypothesis-drawn single-person cases (pay, savings, dividends, property profits and finance costs, other_tax_credits, MCA, employer pension contributions, Child Benefit; every third taxpayer Scottish):

  1. 0 ≤ Step 6 ≤ Step 5, and Step 6 = min(Σ Step 6 list, Step 5).
  2. Income tax = Step 5 − Step 6 + Step 7, so Step 7 ≤ income tax ≤ Step 5 + Step 7.
  3. capped_mcad = min(MCA deduction, max(0, Step 5 − other_tax_credits)), and the finance-cost reduction ≤ the tax left after both.
  4. More other_tax_credits never raises income tax. (Step 5 and the charges can change with them, because the property allowance election weighs the tax on each route.)
  5. Differential, against a second simulation running the pre-fix rules (a structural reform restoring main's income_tax and capped_mcad, so its election is made under the old rules too):
    • income tax is never lower. On each route the new tax is at least the old, and the election takes the cheaper route;
    • where both simulations take the same route, Step 5, the charges and the finance-cost reduction are unchanged, and income tax rises by exactly min(Step 7, max(0, old reductions − Step 5)). So nothing changes where the old reductions fitted in the Step 5 tax or there was no Step 7 charge.
  6. The three lists are disjoint, hold the modelled provisions, and name existing variables.

The draws are single-person cases, a third Scottish and a third aged 70: pay, savings, dividends, property profits and finance costs, other_tax_credits, MCA, employer pension contributions and Child Benefit. Every drawn input is checked to reach the calculation. Across 30 examples (1,440 cases): HICBC applies in 226, the AA charge in 614, the Step 5 cap binds in 699 (341 of them with a Step 7 charge), the fix raises income tax in 342, and the election differs in 60.

Mutation check: restoring the old netting fails invariants 2 and 5; restoring the old capped_mcad cap fails invariant 3 and the MCA YAML case.

Impact (certified uk-data 1.58.1)

Run locally on enhanced_frs_2024_25.h5 at HF revision 2526edbbb687, sha256 056e80fd8e9151d78f432a25cde863340baee81304c6216a37fb575ce8563784 (verified before the runs). One microsimulation at a time: main 76cfc9e, then this branch. Aggregates only.

£m 2025-26 main 2025-26 PR 2026-27 main 2026-27 PR
Income tax 299,291.304 299,291.304 318,983.253 318,983.253
Step 5 tax (income_tax_pre_charges) 293,337.680 293,337.680 312,330.071 312,330.071
Step 6 reductions 0.000 0.000 0.000 0.000
Household net income 1,658,217.470 1,658,217.470 1,706,802.555 1,706,802.555
Household tax 496,171.542 496,171.543 522,634.246 522,634.246

No aggregate moves beyond float32 rounding (£0.001m). On the certified dataset every Step 6 reduction totals £0 in both years (other_tax_credits, the MCA deduction and the finance-cost reduction), so the cap never binds. The fix changes household calculations that enter those inputs, and SPI-based datasets, which carry other_tax_credits. CI's Aggregate impact report agrees for 2025-26 to 2031-32: it passes with 0 checks broken and 0 moves flagged. Income tax moves by between −£10 and +£14 in a year (pounds, not millions), which is float32 summation order: the Step 5 and Step 7 sums are now added separately.

Tests run

  • New YAML cases: 7 pass on this branch. On main, with only the outputs main can compute, the 4 bug cases fail and the 3 boundary cases pass.
  • Property tests: 6 pass (about 10 s).
  • HMRC YAML suite (policyengine-core test policyengine_uk/tests/policy/baseline/gov/hmrc): 867 passed and 1 failed. The failure was the case that pinned the old cap, since corrected; that file now passes 9/9.
  • The 66 Python test files that touch income tax, the fiscal partition or parameter descriptions (pytest -n 4): 1,289 passed, 3 skipped, 0 failed.
  • CI: all 15 checks passed at 27eb87d, before the review-r1 test changes.

Rebase onto #2066

When #2066 merges:

  1. Model.
    • Keep its income_tax (income_tax_before_winter_fuel_payment_charge + winter_fuel_payment_charge).
    • Make income_tax_before_winter_fuel_payment_charge = max(0, income_tax_pre_charges − income_tax_reductions) + income_tax_charges, replacing its read of the removed lists.
    • The WFP charge stays off step_7_additional_tax. The means tests deduct the pre-WFP aggregate, and the charge depends on Pension Credit and Universal Credit receipt, so putting it on the list would make the model circular.
  2. Docs. Say on step_7_additional_tax, income_tax_charges and income_tax that the WFP charge, also a s. 30(1) Step 7 amount, is added in income_tax after the list.
  3. Property tests.
    • Set INCOME_TAX = "income_tax_before_winter_fuel_payment_charge". The pre-fix reform then overrides that variable instead of income_tax, and the accounting, monotonicity and differential checks run on the pre-WFP aggregate.
    • Add a test that income_tax = INCOME_TAX + winter_fuel_payment_charge and that income_tax ≥ income_tax_charges + winter_fuel_payment_charge. The age-70 draws exercise it.
  4. YAML. Add a pension-age case with other_tax_credits above the Step 5 tax and a WFP charge, where income tax equals the WFP charge plus any other Step 7 charge.
  5. Partition. Keep both PRs' fiscal_partition.yaml lines.
  6. Before enqueueing. Re-run the HMRC YAML, the property tests and Charge the winter fuel payment back through income tax, person by person #2066's WFP tests, then get a delta review at the rebased head.

#1963 (Marriage Allowance) has been told about the rename (comment on #1963); whichever lands second carries marriage_allowance_tax_reduction into step_6_tax_reductions.

🤖 Generated with Claude Code

@MaxGhenis @claude
Limit Income Tax reductions to the Step 5 tax
f609da3 
ITA 2007 s. 23 deducts tax reductions at Step 6 from the Step 5 tax and
adds the s. 30 charges at Step 7. s. 29(2) allows a reduction only so far
as there is Step 5 tax to deduct it from. income_tax netted the reductions
against the Step 5 tax and the Step 7 charges together, so other_tax_credits
above the Step 5 tax offset the High Income Child Benefit Charge and the
annual allowance charge, and capped_mcad was capped at the Step 5 tax plus
the HICBC.

Split income_tax_additions and income_tax_subtractions into explicit Step 5,
Step 6 and Step 7 lists, add income_tax_reductions (Step 6, limited to the
Step 5 tax) and income_tax_charges (Step 7), and cap capped_mcad at the
Step 5 tax left after other_tax_credits (s. 27(5)).

Fixes #2544

Co-Authored-By: Claude Opus 5.5 <noreply@anthropic.com>
@MaxGhenis MaxGhenis mentioned this pull request Oct 20, 2026
Draft
@MaxGhenis @claude
Test that Step 6 reductions never offset the Step 7 charges
3de3eb1 
YAML cases for an HICBC payer whose other_tax_credits exceed their Step 5
tax, a married couple's allowance claimant who pays HICBC after VCT relief,
the annual allowance charge, and reductions exactly at the Step 5 tax.
Hypothesis properties: the Step 6 deduction is within [0, Step 5]; income
tax is Step 5 - Step 6 + Step 7, at least the Step 7 charges and at most
Step 5 + Step 7; each reduction is limited to the tax left before it; more
other_tax_credits never raise income tax; and a differential against the
pre-fix formula, which the fix raises by exactly the charges it offset.

Co-Authored-By: Claude Opus 5.5 <noreply@anthropic.com>
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Aggregate impact on certified data: pass

Base 68ce6a6fbc against head 5463e24841, 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

  • This change edits the fiscal partition; review the partition diff alongside the moves it explains.
  • 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
Income tax +£8 -£5 +£1 0 +£1 -£2 -£15

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 +£8 -£5 +£1 0 +£1 -£2 -£15
Government balance, each receipt once +£8 † -£5 † +£1 † 0 † +£1 † -£2 † -£15 †

Model totals

Measure 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32
gov_tax 0 -£4 +£1 0 -£6 -£3 -£20
household_tax +£8 -£10 +£1 0 +£6 0 -£20
pre_budget_change_household_tax +£8 -£8 +£1 0 +£6 0 -£20
gov_balance +£8 † -£5 † +£1 † 0 † +£1 † -£2 † -£15 †

Household income totals

Measure 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32
Household net income -£8 † +£5 † -£1 † 0 † -£1 † +£2 † +£15 †
Household net income (HBAI definition) -£17 +£3 -£1 0 +£4 0 +£20

Inequality

Measure 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32
Gini coefficient, equivalised HBAI income before housing costs -0.0000 +0.0000 -0.0000 0 +0.0000 0 +0.0000

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 7: mean household_net_income per household 0 † 0 † 0 † 0 † -£0.00 † 0 † 0 †
Decile 9: mean household_net_income per household -£0.00 † 0 † 0 † 0 † -£0.00 † 0 † +£0.00 †
Decile 10: mean household_net_income per household 0 † +£0.00 † -£0.00 † 0 † +£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 +£1 +£0 -£0 0 +£12 +£4 +£2
Raise higher rate by 1pp 0 +£1 -£1 -£6 -£53 +£0 +£20
Raise personal allowance by ~800GBP/year 0 0 +£0 0 -£0 0 +£10
Raise child benefit by 25GBP/week per additional child +£1 -£0 -£0 0 +£3 +£0 +£12
Reduce Universal Credit taper rate to 20% 0 0 -£0 0 0 0 -£0
Raise Class 1 main employee NICs rate to 10% 0 +£3 -£0 0 +£12 +£3 +£10
Raise VAT standard rate by 2pp +£33 -£4 0 0 +£12 -£1 +£10
Raise additional rate by 3pp 0 +£5 +£2 +£1 +£1 +£507 +£33
Raise the Universal Credit standard allowance by 10% 0 0 -£0 0 0 +£0 +£0
Raise the State Pension by 10% 0 0 0 0 0 +£0 0

Standard reforms: change in each reform's target

Measure 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32
Raise basic rate by 1pp: change in income_tax +£1 +£3 +£0 0 0 -£1 +£2
Raise higher rate by 1pp: change in income_tax -£8 +£4 -£1 -£6 -£34 +£2 +£2
Raise personal allowance by ~800GBP/year: change in income_tax 0 -£0 0 0 0 +£0 +£0
Raise additional rate by 3pp: change in income_tax 0 +£7 +£2 +£3 -£11 +£254 -£12

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 0 0 0 0 0
Decile 3 0 0 0 0 0 0 0
Decile 4 0 0 0 0 0 0 0
Decile 5 0 0 0 0 0 0 0
Decile 6 0 0 0 0 0 0 0
Decile 7 0 0 0 0 0 0 0
Decile 8 0 0 0 0 0 0 0
Decile 9 0 0 0 0 fewer than 10 households change 0 fewer than 10 households change
Decile 10 0 fewer than 10 households change fewer than 10 households change 0 fewer than 10 households change fewer than 10 households change fewer than 10 households change
all 0 fewer than 10 households change fewer than 10 households change 0 fewer than 10 households change fewer than 10 households change fewer than 10 households change
Year People gaining over £1 People losing over £1
2025-26 0.0% 0.0%
2026-27 fewer than 10 households change fewer than 10 households change
2027-28 fewer than 10 households change fewer than 10 households change
2028-29 0.0% 0.0%
2029-30 fewer than 10 households change fewer than 10 households change
2030-31 fewer than 10 households change fewer than 10 households change
2031-32 fewer than 10 households change fewer than 10 households change

No change in any year: components the model counts twice; population; poverty rates; people in poverty.

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.

Provenance
Side Commit Runtime Environment hash Partition hash Time
base main 68ce6a6fbc uk 2.141.10 (files 6748b40f2292), core 3.33.2, py 3.13.16 aarch64 115483567a8e f210f83d5be4 1087.33s
head #2545 merged into main 5463e24841 uk 2.141.10 (files 7f43218f70a5), core 3.33.2, py 3.13.16 aarch64 115483567a8e 4fef28119a69 1106.72s

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 £299.38bn £319.14bn £336.66bn £351.81bn £367.35bn £385.48bn £403.83bn
National Insurance (employee and self-employed) £52.58bn £54.94bn £56.75bn £58.48bn £60.62bn £62.57bn £65.03bn
National Insurance (employer) £152.64bn £159.18bn £164.14bn £168.73bn £176.11bn £181.72bn £188.90bn
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 £0.49bn £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 £10.06bn £10.56bn £10.98bn £11.40bn £11.81bn £12.23bn £12.64bn
Land transaction tax (Wales) £0.00bn £0.00bn £0.00bn £0.00bn £0.00bn £0.00bn £0.00bn
Land and buildings transaction tax (Scotland) £0.01bn £0.01bn £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 £6.66bn £7.04bn £7.02bn £7.09bn £7.21bn £7.34bn £7.44bn
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 £78.78bn £83.09bn £84.89bn £86.65bn £87.58bn £89.00bn £90.33bn
Housing Benefit £8.59bn £8.92bn £9.19bn £9.33bn £9.61bn £9.87bn £10.15bn
Council Tax Reduction £1.99bn £2.03bn £2.08bn £2.13bn £2.18bn £2.23bn £2.28bn
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 1,490k 1,489k 1,477k 1,455k 1,457k 1,454k 1,450k
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 6,371k 6,379k 6,409k 6,419k 6,395k 6,387k 6,371k
Housing Benefit 1,254k 1,252k 1,254k 1,240k 1,244k 1,247k 1,249k
Council Tax Reduction 3,184k 3,210k 3,223k 3,244k 3,261k 3,279k 3,292k
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 £899.48bn £939.37bn £976.38bn £1,009.57bn £1,045.85bn £1,082.80bn £1,123.71bn
Government spending £536.58bn † £550.92bn † £557.25bn † £564.32bn † £572.87bn † £582.12bn † £591.28bn †
Government balance, each receipt once £362.90bn † £388.45bn † £419.13bn † £445.25bn † £472.97bn † £500.68bn † £532.43bn †
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 £902.61bn £942.50bn £979.51bn £1,012.70bn £1,048.98bn £1,085.93bn £1,126.84bn
household_tax £496.26bn £522.79bn £548.64bn £570.82bn £593.03bn £617.49bn £644.24bn
pre_budget_change_household_tax £488.43bn £514.67bn £540.29bn £561.78bn £583.75bn £607.95bn £634.34bn
gov_spending £536.58bn † £550.92bn † £557.25bn † £564.32bn † £572.87bn † £582.12bn † £591.28bn †
household_benefits £536.58bn † £550.92bn † £557.25bn † £564.32bn † £572.87bn † £582.12bn † £591.28bn †
gov_balance £366.03bn † £391.58bn † £422.26bn † £448.38bn † £476.10bn † £503.81bn † £535.56bn †
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 £1,872.88bn £1,930.99bn £2,001.98bn
Household net income £1,658.11bn † £1,706.62bn † £1,738.40bn † £1,772.54bn † £1,808.64bn † £1,850.28bn † £1,901.98bn †
Household net income (HBAI definition) £1,466.67bn £1,513.40bn £1,545.60bn £1,578.60bn £1,612.63bn £1,651.67bn £1,702.07bn
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 13.7% 13.1% 13.2% 13.4% 13.5% 13.6% 13.6%
Absolute poverty, after housing costs: everyone 21.1% 20.6% 21.3% 21.5% 21.9% 22.2% 22.3%
Absolute poverty, after housing costs: children 32.1% 30.3% 30.9% 31.1% 31.7% 32.3% 32.5%
Absolute poverty, after housing costs: working-age adults 19.6% 19.4% 20.2% 20.4% 20.8% 21.0% 21.0%
Absolute poverty, after housing costs: pensioners 12.7% 12.5% 12.6% 12.9% 13.0% 13.1% 13.4%
Relative poverty, before housing costs: everyone 16.9% 16.4% 16.4% 16.5% 16.6% 16.7% 16.7%
Relative poverty, before housing costs: children 25.6% 23.5% 23.2% 23.2% 23.3% 23.4% 23.4%
Relative poverty, before housing costs: working-age adults 14.4% 14.4% 14.7% 14.8% 14.9% 15.1% 15.0%
Relative poverty, before housing costs: pensioners 14.8% 14.9% 14.1% 14.3% 14.2% 14.2% 14.4%
Relative poverty, after housing costs: everyone 21.7% 21.3% 21.4% 21.5% 21.7% 21.8% 22.0%
Relative poverty, after housing costs: children 33.0% 31.6% 31.2% 31.1% 31.5% 31.6% 32.0%
Relative poverty, after housing costs: working-age adults 20.0% 20.0% 20.3% 20.4% 20.6% 20.8% 20.9%
Relative poverty, after housing costs: pensioners 13.5% 13.1% 12.7% 12.8% 12.7% 12.7% 12.8%
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 11,051k 10,427k 10,848k 10,947k 11,079k 11,209k 11,218k
Absolute poverty, before housing costs: children 3,560k 3,141k 3,261k 3,253k 3,298k 3,334k 3,334k
Absolute poverty, before housing costs: working-age adults 5,864k 5,737k 6,070k 6,165k 6,237k 6,315k 6,319k
Absolute poverty, before housing costs: pensioners 1,627k 1,549k 1,517k 1,529k 1,544k 1,561k 1,565k
Absolute poverty, after housing costs: everyone 14,660k 14,362k 14,899k 15,116k 15,439k 15,724k 15,870k
Absolute poverty, after housing costs: children 4,809k 4,556k 4,676k 4,719k 4,832k 4,939k 4,994k
Absolute poverty, after housing costs: working-age adults 8,333k 8,326k 8,775k 8,931k 9,120k 9,275k 9,329k
Absolute poverty, after housing costs: pensioners 1,518k 1,480k 1,449k 1,466k 1,487k 1,509k 1,547k
Relative poverty, before housing costs: everyone 11,760k 11,456k 11,504k 11,625k 11,706k 11,868k 11,914k
Relative poverty, before housing costs: children 3,840k 3,538k 3,514k 3,525k 3,546k 3,582k 3,602k
Relative poverty, before housing costs: working-age adults 6,154k 6,160k 6,365k 6,465k 6,537k 6,651k 6,651k
Relative poverty, before housing costs: pensioners 1,766k 1,758k 1,625k 1,634k 1,623k 1,634k 1,661k
Relative poverty, after housing costs: everyone 15,065k 14,863k 14,993k 15,090k 15,314k 15,490k 15,653k
Relative poverty, after housing costs: children 4,948k 4,756k 4,711k 4,715k 4,795k 4,840k 4,919k
Relative poverty, after housing costs: working-age adults 8,511k 8,559k 8,822k 8,917k 9,068k 9,192k 9,260k
Relative poverty, after housing costs: pensioners 1,605k 1,548k 1,460k 1,458k 1,452k 1,457k 1,475k
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 0.3074 0.3051 0.3065 0.3071 0.3077 0.3083 0.3093
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 £17,707 † £17,997 † £17,941 † £17,992 † £18,326 † £18,523 † £18,686 †
Decile 2: mean household_net_income per household £28,362 † £29,040 † £28,672 † £29,013 † £29,373 † £29,779 † £30,329 †
Decile 3: mean household_net_income per household £34,607 † £35,902 † £36,508 † £37,008 † £37,263 † £37,825 † £38,514 †
Decile 4: mean household_net_income per household £39,329 † £40,908 † £41,807 † £42,695 † £43,186 † £43,984 † £45,129 †
Decile 5: mean household_net_income per household £44,871 † £46,147 † £47,077 † £47,609 † £48,379 † £49,251 † £50,073 †
Decile 6: mean household_net_income per household £47,930 † £49,324 † £50,272 † £51,070 † £52,170 † £52,939 † £54,222 †
Decile 7: mean household_net_income per household £56,320 † £57,578 † £58,469 † £59,414 † £60,124 † £61,607 † £63,192 †
Decile 8: mean household_net_income per household £69,250 † £70,361 † £71,635 † £72,869 † £74,327 † £75,790 † £77,563 †
Decile 9: mean household_net_income per household £79,671 † £82,008 † £83,242 † £84,444 † £86,085 † £87,570 † £90,640 †
Decile 10: mean household_net_income per household £117,648 † £120,458 † £122,406 † £124,560 † £126,772 † £129,080 † £131,872 †
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 £-3.83bn £-3.96bn £-4.03bn £-4.10bn £-4.20bn £-4.30bn £-2.02bn
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 £12.47bn £12.81bn £13.29bn
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 £3.27bn £3.47bn £3.67bn £3.91bn £4.23bn
Raise the Universal Credit standard allowance by 10% £-3.04bn £-3.17bn £-3.24bn £-3.32bn £-3.37bn £-3.43bn £-3.47bn
Raise the State Pension by 10% £-8.92bn £-9.13bn £-9.03bn £-9.06bn £-9.26bn £-9.51bn £-9.78bn
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 £3.55bn £3.83bn £4.06bn £4.28bn £4.50bn £4.78bn £4.97bn
Raise personal allowance by ~800GBP/year: change in income_tax £-3.96bn £-4.11bn £-4.19bn £-4.27bn £-4.36bn £-4.47bn £-1.77bn
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 £12.78bn £13.13bn £13.62bn
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 £3.27bn £3.47bn £3.67bn £3.91bn £4.23bn
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

@MaxGhenis @claude
Correct the capped MCA case that pinned the Step 5 + HICBC cap
27eb87d 
The case expected a £700 cap on an £800 reduction against £500 of Step 5
tax and a £200 HICBC. Under ITA 2007 s. 29(2) the reduction is limited to
the £500 of Step 5 tax, and the HICBC is added at Step 7, so income tax
is £200.

Co-Authored-By: Claude Opus 5.5 <noreply@anthropic.com>
This was referenced Oct 21, 2026
Draft
Open
@MaxGhenis @claude
Make the Step 6/7 property tests exercise the drawn inputs (review r1)
f903b28 
- Reset the reusable simulation before setting inputs: reset_calculations()
  cleared employment income and Child Benefit, which the simulation was not
  built with, so the HICBC cases never ran. The tests now assert that every
  drawn input reaches the calculation, and draw pension-age people too.
- Compare against a simulation of the pre-fix rules (a structural reform of
  income_tax and capped_mcad), not a reconstruction from the fixed run's
  values. The property allowance election weighs income tax on each route,
  so it can differ under the old rules. Income tax is never lower on either
  route, so never lower; where both take the same route, Step 5, the charges
  and the finance-cost reduction are unchanged and the restored charge is
  exact.
- Drop the assumption that more other_tax_credits leave Step 5 unchanged,
  which an election change breaks.
- Add the YAML case of a landlord whose election let the old netting offset
  £168 of HICBC, and qualify the s. 27(5) ordering in the docstring.

Co-Authored-By: Claude Opus 5.5 <noreply@anthropic.com>
juaristi22
juaristi22 approved these changes Oct 24, 2026
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Reviewed at f903b28a75b9ef223c45547be6b3e4b40cd5c3c3. No actionable findings from independent code and statutory-source reviews.

The change correctly caps Step 6 reductions against Step 5 tax before adding Step 7 charges. Final-tax cases confirm that excess credits cannot remove the £1,406 HICBC or £4,000 annual-allowance charge. All 45 focused tests passed, including generated invariants, MCA, property elections and downstream consumers.

This approval covers the present head. The declared #2066 Winter Fuel Payment charge prerequisite still requires integration and retesting before landing; the documented aggregate foreign-relief and Gift Aid limitations remain.

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Income tax reductions offset the Step 7 charges (HICBC, annual allowance charge)

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@MaxGhenis @juaristi22