Skip to content

Count property income after finance costs in HBAI and market income - #2564

Merged
MaxGhenis merged 1 commit into
mainfrom
fix-2390-hbai-property-income
Oct 22, 2026
Merged

Count property income after finance costs in HBAI and market income#2564
MaxGhenis merged 1 commit into
mainfrom
fix-2390-hbai-property-income

Conversation

@MaxGhenis

@MaxGhenis MaxGhenis commented Oct 22, 2026 •
edited
Loading

Copy link
Copy Markdown
Collaborator

Fixes #2390

What and why

hbai_household_net_income, market_income and household_market_income added property_income. Since #2172 (2.123.0), that is the landlord's profit before the costs of dwelling-related loans. Income tax hasn't deducted those costs since 2020-21 (ITTOIA 2005 s. 272A(4): "no deduction is allowed for costs of a dwelling-related loan"). It relieves them with a tax reduction instead (s. 274A). The three income measures therefore counted mortgage interest as income. As a result, a landlord's finance costs raised their HBAI income by the tax reduction they earn.

HBAI's basis is after interest. The DWP's HBAI methodology (FYE 2025) builds income from the Family Resources Survey and lists "investment income" without further detail. Its "mortgage interest payments" housing cost is the household's own home. The FRS question it rests on is PropRent: "How much rent have you received before tax from other property in the last 12 months, AFTER paying for any of the things on this card?" Show card K6 lists "1. Mortgage payments" and "3. Interest on a loan to purchase the property" (FRS 2023-24 question instructions, p. 302). The methodology itself doesn't say how landlords' mortgage interest is treated. The basis comes from the survey question.

Change. The three lists now add property_income_after_finance_costs (property_income less property_finance_costs, nil where the costs exceed a positive profit). The legacy means tests already count property income this way.

  • No formula changes: the edits are list entries, a docstring and a reference.
  • taxable_property_income, the s. 274A reduction, total_income and every means test are untouched.
Landlord, 2026-27: £40,000 pay, £10,000 profit before interest, £4,000 interest Before After
market_income, household_market_income £50,000 £46,000
income_tax (s. 274A reduction of £800 included) £6,686 £6,686
hbai_household_net_income £41,119.60 £37,119.60
HBAI income change from the £4,000 of interest +£800 −£3,200

Losses. A positive profit with larger costs gives nil, not a loss: property_income_after_finance_costs already behaves this way. That matches how both data pipelines read the FRS: uk-data frs.py and Microcosm frs_spine.py count a RentProf loss as zero. A loss before interest (negative property_income) is still counted as negative, as before.

Readers checked (origin/main 9d81a5d)

No tax base or benefit means test reads the changed aggregates, so baseline tax, benefit and fiscal totals are unchanged. Some other readers can move results when switched on: private-school attendance imputation ranks households by market income (it changes VAT only when imputation is on and the private-school VAT lever is set; stored attendance bypasses it); the opt-in labour-supply dynamics use non-zero income elasticities; and the pre-Budget income deciles allocate education, NHS and other-spending changes across households (aggregate allocations are parameter-fixed, household incidence moves).

  • market_income: no reader in policyengine_uk/ (docs only).
  • household_market_income: read by household_net_income, household_net_income_ahc, household_gross_income and pre_budget_change_household_net_income, which are outputs only.
    • pre_budget_change_household_net_income feeds pre_budget_change_ons_household_income_decile, which feeds the nhs/education/other_public_spending_budget_change contrib levers. These are zero unless set.
    • contrib/labour/attends_private_school.py:64 ranks households on it to impute private-school pupils, which feed private_school_vat in gov_tax/household_tax. On a dataset that stores attends_private_school, the formula doesn't run. The Microcosm Budget cuts store it (microcosm#1095, merged 2026-10-16; the 20261019T083323Z cut has the column), so private school VAT can't move there. On a dataset without the column, landlords with finance costs rank slightly lower. uk-data stores only attends_private_school_random_draw (frs.py:1850). It also fills no property_finance_costs, so nothing moves there (invariant 1).
    • utils/aggregate_impact/measure.py reports it and uses it in the net-income identity, which still holds.
  • hbai_household_net_income (and the before-reset, AHC and equivalised variants) is read by:
    • the poverty flags, gaps and lines;
    • household_income_decile;
    • the dynamics/labour_supply.py and progression.py targets;
    • measure.py.
      The HBAI rebuild in measure.py uses HBAI_HOUSEHOLD_NET_INCOME_ADDS, so it follows the swap.
  • household_net_income is read by:
    • marginal_tax_rate and marginal_tax_rate_wrt_employer_cost, which use differences and are unaffected;
    • relative_income_change, which feeds income_elasticity_lsr. The income elasticity is 0 by default, so nothing moves unless a run turns it on;
    • dynamics/participation.py, which uses differences.
  • Tax and benefits: total_income (income tax) adds property_income directly and is unchanged. HB, IS, tax credits, CTR and PC already read property_income_after_finance_costs. UC counts no property income.

Tests

  • YAML household/income/hbai_property_income.yaml: four cases hand-computed from the 2026-27 rates.
    • Interest deducted from market and HBAI income.
    • Costs above the profit leave the landlord's HBAI income equal to a non-landlord's.
    • Interest on a let property is not a housing cost, while interest on the home is.
    • Joint landlords.
      All four fail on origin/main (for example market_income@2026: [50000.] differs from 46000.0) and pass here.
  • Property test test_hbai_property_income_properties.py: 30 Hypothesis examples × 21 landlords, each simulated without and with finance costs, at 2027 (property basic rate read from parameters), England and Scotland. It fails on origin/main at the first example (market income doesn't fall) and passes here.
  • Local runs on this branch:
    • 526 YAML cases pass: every YAML file that mentions property_income, property_finance_costs, market_income or hbai_household_net_income, plus all of tests/policy/baseline/household.
    • aggregate_impact/test_aggregate_impact_measure.py: 44 passed.
    • code_health/test_aggregation_lists.py: 8 passed.
    • code_health/test_household_income_lists.py: 2 passed.
    • uvx ruff@latest format --check . (0.17.1) is clean.
    • Host load kept the other related property suites from finishing locally. None of them sets property_finance_costs, so the change is a no-op for them (see invariant 1). CI runs them.

Invariants

  1. No-op without finance costs: with property_finance_costs = 0, all three aggregates are unchanged to the penny. property_income_after_finance_costs equals property_income for every profit, including losses.
  2. Market income: finance costs C lower market_income and household_market_income by exactly min(C, max(profit, 0)).
  3. Tax saved is bounded: finance costs never raise income tax and never change NI. The tax they save is at most the property basic rate × min(C, max(profit, 0)).
  4. HBAI accounting: finance costs move HBAI income (before the reset) by −min(C, max(profit, 0)) plus the tax saved plus any change in the means-tested benefits HBAI counts, and nothing else.
  5. Never raised: before any benefit response, finance costs never raise HBAI income. This follows from 3 and 4: the change is at most −(1 − basic rate) × min(C, max(profit, 0)), which is ≤ 0.

Invariants 2 to 5 are executed by the property test. Invariant 1 holds by construction (where(profit > 0, max_(profit - 0, 0), profit)).

Impact

Microcosm Budget data. These are real microsim runs, aggregates only, at calibrated weights.

  • Data: the Microcosm UK 2024-25 national cut 20261019T083323Z (HF policyengine/populace-uk-private, tag microcosm-uk-2024-25-national-20261019T083323Z-6cba5d71, revision bb2258482ef8). This is the certified interim Budget data, built with pe-uk 2.132.6.
  • Code: origin/main 9d81a5d against this branch, both on the locked core 3.33.2.
2025 2026 2029
Finance costs taken off profit (property_income − property_income_after_finance_costs) £8.71bn £9.35bn £11.18bn
hbai_household_net_income (and AHC) −£8.69bn (−0.58%) −£9.33bn (−0.61%) −£11.15bn (−0.68%)
household_market_income, market_income, household_net_income −£8.71bn −£9.35bn −£11.18bn
income_tax, gov_tax, household_tax, household_benefits, gov_balance, s. 274A relief £0 £0 £0
Absolute poverty, BHC / AHC +0.08pp / +0.16pp +0.08pp / +0.16pp +0.13pp / +0.21pp
Relative poverty, BHC / AHC −0.17pp / +0.02pp −0.26pp / −0.10pp −0.36pp / −0.11pp
Median equivalised HBAI income, BHC −0.54% −0.69% −0.73%
Gini, equivalised HBAI BHC −0.0011 −0.0011 −0.0012

How to read the table:

  • Who is affected: about 1.0m people have finance costs, £10.2bn of them in 2026.
  • Costs not taken off: £0.86bn of the 2026 costs are not deducted. They lie beyond a landlord's profit, or sit against a nil or loss profit.
  • HBAI vs market income: HBAI falls £23m less than market income in 2026, because some households' HBAI income is reset at zero.
  • Relative poverty falls while absolute poverty rises. Landlords mostly sit above the median. Their lower incomes pull the median person's equivalised income down 0.69% in 2026, and the 60% line falls with it. More people clear the lower line than landlords fall below it. The absolute line is fixed, so absolute poverty rises.
  • Budget measures: no tax or benefit reads these aggregates, so standard measures' costings are unchanged; the decile and poverty breakdowns move. Measures that use private-school imputation, the labour-supply dynamics or the decile-based spending allocators can also move, as above.
  • Comparison with the triage figure: this is larger than the −£2.95bn Microcosm measured (2025, microcosm experiments/1106-uk-property-income-receipts.md C11 item 1). That experiment reversed only the FRS channel's add-back in the data, which also cut income tax by £0.34bn. This change leaves data and tax alone and nets the costs on both the FRS and the SPI channels. The issue's £6.8bn SPI figure was not separately measured.

Aggregate impact CI (comment, run): pass.

  • Base 9d81a5dfa8 against head c244eae09c, on enhanced_frs_2024_25.h5 (policyengine-uk-data 1.58.1, sha256 056e80fd8e91), 2025-26 to 2031-32.
  • The report: "No household's net income changes in any year." Also: "No change in any year: receipts by tax head; government balance, each component counted once; model totals; components the model counts twice; household income totals; population; poverty rates; people in poverty; inequality; mean household net income in each side's own deciles; standard reform costings (change in gov_balance); standard reforms: change in each reform's target."
  • Checks: 0 broken, 0 fixed, 1 failing on both sides (sign:vat, unrelated).
  • This is the expected £0: the pinned file has no property_finance_costs column, so invariant 1 makes the change a no-op there. It also has no attends_private_school column. The Budget-relevant figures are the Microcosm ones above.

Reproducer: policyengine_uk/tests/policy/baseline/household/income/hbai_property_income.yaml, policyengine_uk/tests/test_hbai_property_income_properties.py::test_finance_costs_lower_market_and_hbai_income

axiom: n/a: HBAI and market income are statistical income measures with no legal provision to encode, and the income tax and means-test rules are unchanged

🤖 Generated with Claude Code

@MaxGhenis @claude
Count property income after finance costs in HBAI and market income
e34eb57 
hbai_household_net_income, market_income and household_market_income
added property_income, the landlord's profit before the costs of
dwelling-related loans. HBAI is built from the Family Resources Survey,
which records rent from property after the mortgage payments and loan
interest on show card K6, so the three now add
property_income_after_finance_costs, as the legacy means tests do.
Finance costs then lower HBAI income by the costs less the s. 274A tax
reduction instead of raising it by the reduction. Income tax and the
means tests are unchanged.

Fixes #2390.

Co-Authored-By: Claude Opus 5.5 <noreply@anthropic.com>
@github-actions

github-actions Bot commented Oct 22, 2026

Copy link
Copy Markdown
Contributor

Aggregate impact on certified data: pass

Base 9d81a5dfa8 against head c244eae09c, 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.

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

Household net income by decile

No household's net income changes in any year.

No change in any year: receipts by tax head; government balance, each component counted once; model totals; components the model counts twice; household income totals; population; poverty rates; people in poverty; inequality; mean household net income in each side's own deciles; standard reform costings (change in gov_balance); 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.

Provenance
Side Commit Runtime Environment hash Partition hash Time
base main 9d81a5dfa8 uk 2.146.2 (files 582dff2713e2), core 3.33.2, py 3.13.17 aarch64 6a24b7ff580b f210f83d5be4 1551.66s
head #2564 merged into main c244eae09c uk 2.146.2 (files abaaf2b05f98), core 3.33.2, py 3.13.17 aarch64 6a24b7ff580b f210f83d5be4 1559.76s

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 £299.29bn £319.01bn £336.47bn £351.62bn £367.17bn £385.29bn £403.59bn
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 £4.48bn £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 £122.15bn £126.64bn £127.57bn £129.47bn £133.29bn £137.24bn £141.32bn
Pension Credit £6.68bn £7.07bn £7.06bn £7.13bn £7.26bn £7.39bn £7.49bn
Winter Fuel Payment £1.70bn £1.68bn £1.59bn £1.58bn £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 £78.81bn £83.11bn £84.93bn £86.69bn £87.61bn £89.03bn £90.35bn
Housing Benefit £8.59bn £8.93bn £9.19bn £9.34bn £9.61bn £9.87bn £10.15bn
Council Tax Reduction £1.99bn £2.03bn £2.08bn £2.13bn £2.18bn £2.23bn £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) £0.31bn £0.32bn £0.33bn £0.34bn £0.35bn £0.36bn £0.36bn
Carer's Allowance Supplement (Scotland) £0.00bn £0.04bn £0.04bn £0.04bn £0.04bn £0.04bn £0.04bn
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 1,478k 1,459k 1,459k 1,457k 1,453k
Winter Fuel Payment 7,092k 7,011k 6,601k 6,517k 6,493k 6,381k 6,254k
Pension Age Winter Heating Payment (Scotland) 806k 807k 807k 805k 809k 812k 816k
Universal Credit 6,371k 6,379k 6,409k 6,420k 6,395k 6,387k 6,371k
Housing Benefit 1,254k 1,252k 1,254k 1,240k 1,245k 1,247k 1,249k
Council Tax Reduction 3,186k 3,211k 3,224k 3,245k 3,264k 3,280k 3,293k
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) 71k 72k 72k 72k 73k 73k 73k
Carer's Allowance Supplement (Scotland) 0k 72k 72k 72k 73k 73k 73k
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 £899.38bn £939.24bn £976.18bn £1,009.38bn £1,045.66bn £1,082.60bn £1,123.48bn
Government spending £536.24bn † £550.45bn † £556.57bn † £563.61bn † £572.15bn † £581.38bn † £590.55bn †
Government balance, each receipt once £363.15bn † £388.79bn † £419.62bn † £445.77bn † £473.51bn † £501.23bn † £532.93bn †
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 £902.51bn £942.37bn £979.31bn £1,012.51bn £1,048.79bn £1,085.73bn £1,126.61bn
household_tax £496.17bn £522.66bn £548.45bn £570.64bn £592.85bn £617.30bn £644.01bn
pre_budget_change_household_tax £488.34bn £514.54bn £540.10bn £561.60bn £583.57bn £607.75bn £634.11bn
gov_spending £536.24bn † £550.45bn † £556.57bn † £563.61bn † £572.15bn † £581.38bn † £590.55bn †
household_benefits £536.24bn † £550.45bn † £556.57bn † £563.61bn † £572.15bn † £581.38bn † £590.55bn †
gov_balance £366.28bn † £391.92bn † £422.75bn † £448.90bn † £476.64bn † £504.36bn † £536.06bn †
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 £1,657.86bn † £1,706.28bn † £1,737.91bn † £1,772.02bn † £1,808.10bn † £1,849.73bn † £1,901.48bn †
Household net income (HBAI definition) £1,466.42bn £1,513.06bn £1,545.11bn £1,578.08bn £1,612.09bn £1,651.12bn £1,701.58bn
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% 15.0% 15.5% 15.6% 15.7% 15.8% 15.8%
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% 13.2% 13.3% 13.5% 13.6% 13.7% 13.7%
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 12.8% 12.6% 12.6% 13.1% 13.4% 13.4% 13.4%
Relative poverty, before housing costs: everyone 16.9% 16.4% 16.5% 16.6% 16.6% 16.7% 16.7%
Relative poverty, before housing costs: children 25.6% 23.5% 23.2% 23.2% 23.2% 23.2% 23.2%
Relative poverty, before housing costs: working-age adults 14.4% 14.4% 14.6% 14.8% 14.9% 15.0% 15.0%
Relative poverty, before housing costs: pensioners 15.0% 14.9% 14.4% 14.7% 14.3% 14.3% 14.6%
Relative poverty, after housing costs: everyone 21.7% 21.3% 21.4% 21.5% 21.6% 21.9% 22.0%
Relative poverty, after housing costs: children 33.0% 31.6% 31.0% 31.1% 31.3% 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 13.7% 13.1% 12.8% 13.0% 12.7% 12.9% 13.2%
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 11,056k 10,435k 10,856k 10,960k 11,091k 11,220k 11,234k
Absolute poverty, before housing costs: children 3,560k 3,141k 3,261k 3,253k 3,298k 3,334k 3,335k
Absolute poverty, before housing costs: working-age adults 5,862k 5,735k 6,068k 6,164k 6,235k 6,314k 6,321k
Absolute poverty, before housing costs: pensioners 1,634k 1,559k 1,527k 1,543k 1,558k 1,572k 1,579k
Absolute poverty, after housing costs: everyone 14,663k 14,366k 14,907k 15,144k 15,491k 15,755k 15,874k
Absolute poverty, after housing costs: children 4,809k 4,556k 4,676k 4,719k 4,835k 4,939k 4,994k
Absolute poverty, after housing costs: working-age adults 8,333k 8,326k 8,775k 8,931k 9,122k 9,275k 9,329k
Absolute poverty, after housing costs: pensioners 1,521k 1,484k 1,456k 1,493k 1,533k 1,541k 1,551k
Relative poverty, before housing costs: everyone 11,780k 11,464k 11,523k 11,660k 11,708k 11,832k 11,879k
Relative poverty, before housing costs: children 3,840k 3,538k 3,506k 3,524k 3,542k 3,554k 3,565k
Relative poverty, before housing costs: working-age adults 6,154k 6,160k 6,356k 6,464k 6,530k 6,636k 6,628k
Relative poverty, before housing costs: pensioners 1,786k 1,766k 1,661k 1,673k 1,636k 1,643k 1,686k
Relative poverty, after housing costs: everyone 15,110k 14,866k 14,956k 15,109k 15,280k 15,513k 15,696k
Relative poverty, after housing costs: children 4,948k 4,756k 4,684k 4,715k 4,771k 4,840k 4,916k
Relative poverty, after housing costs: working-age adults 8,531k 8,560k 8,793k 8,917k 9,054k 9,187k 9,257k
Relative poverty, after housing costs: pensioners 1,631k 1,551k 1,479k 1,477k 1,455k 1,486k 1,523k
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 0.3052 0.3066 0.3072 0.3078 0.3084 0.3095
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 £17,700 † £17,996 † £17,934 † £17,991 † £18,328 † £18,506 † £18,680 †
Decile 2: mean household_net_income per household £28,323 † £29,102 † £28,705 † £28,983 † £29,330 † £29,734 † £30,317 †
Decile 3: mean household_net_income per household £34,629 † £35,807 † £36,445 † £37,019 † £37,221 † £37,811 † £38,492 †
Decile 4: mean household_net_income per household £39,334 † £40,803 † £41,758 † £42,693 † £43,435 † £44,025 † £44,926 †
Decile 5: mean household_net_income per household £44,861 † £46,156 † £47,079 † £47,439 † £48,027 † £49,181 † £50,036 †
Decile 6: mean household_net_income per household £47,925 † £49,329 † £50,288 † £51,174 † £52,167 † £52,953 † £54,205 †
Decile 7: mean household_net_income per household £56,319 † £57,568 † £58,473 † £59,423 † £60,149 † £61,621 † £62,893 †
Decile 8: mean household_net_income per household £69,267 † £70,356 † £71,672 † £72,810 † £74,351 † £75,797 † £77,578 †
Decile 9: mean household_net_income per household £79,648 † £81,992 † £83,192 † £84,486 † £86,056 † £87,570 † £90,645 †
Decile 10: mean household_net_income per household £117,618 † £120,489 † £122,421 † £124,552 † £126,802 † £129,073 † £131,887 †
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 £6.21bn £6.50bn £6.70bn £6.90bn £7.11bn £7.34bn £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 £-4.19bn £-4.29bn £-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 £-21.95bn £-22.32bn £-22.79bn
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 £-3.42bn £-3.47bn
Raise the State Pension by 10% £-7.81bn £-8.07bn £-7.99bn £-8.11bn £-8.36bn £-8.66bn £-9.02bn
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 £6.86bn £7.07bn £7.28bn £7.52bn £7.80bn
Raise higher rate by 1pp: change in income_tax £3.55bn £3.83bn £4.06bn £4.28bn £4.50bn £4.77bn £4.97bn
Raise personal allowance by ~800GBP/year: change in income_tax £-3.96bn £-4.10bn £-4.19bn £-4.26bn £-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 £22.78bn
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 £3.37bn £3.43bn £3.47bn
Raise the State Pension by 10%: change in state_pension £10.72bn £11.23bn £11.37bn £11.62bn £12.08bn £12.54bn £13.07bn

@MaxGhenis
MaxGhenis marked this pull request as ready for review October 22, 2026 08:22
@MaxGhenis

MaxGhenis commented Oct 22, 2026

Copy link
Copy Markdown
Collaborator Author

Hand-off to the UK hub (job 20261022-001253-sprint-fix-2390)

Head: e34eb57bc2e3cf997889b6650658f948284b9bbd, one commit on origin/main 9d81a5dfa. Ready for review: no draft, mergeable: MERGEABLE, gh pr checks all green.

Review: none run in the job, per adopt-common. The hub dispatches the GPT-6.1 Sol review at this head.

Tests

  • New: household/income/hbai_property_income.yaml (4 cases) and test_hbai_property_income_properties.py::test_finance_costs_lower_market_and_hbai_income. Both fail on an origin/main export and pass here.
  • Local, on this branch:
    • 526 YAML cases pass: every YAML file mentioning the changed variables, plus tests/policy/baseline/household.
    • aggregate_impact/test_aggregate_impact_measure.py: 44 pass.
    • code_health/test_aggregation_lists.py and test_household_income_lists.py: 8 + 2 pass.
    • uvx ruff@latest format --check . (0.17.1) is clean.
  • CI: all 5 Python shards, YAML, Lint, Fix evidence and docs pass.

Impact

  • CI on certified uk-data 1.58.1: £0 in every year (report). That file has no property_finance_costs.
  • Microcosm interim Budget cut 20261019T083323Z, 2026:
    • hbai_household_net_income −£9.33bn (−0.61%).
    • Market income and household net income −£9.35bn.
    • Tax, benefits and gov_balance £0.
    • Absolute poverty BHC +0.08pp, AHC +0.16pp.
    • Relative poverty BHC −0.26pp, AHC −0.10pp: the median falls 0.69%.
    • Gini −0.0011.
    • 2025 and 2029 are in the body. These are aggregates only, from main and branch code (2.146.2) on a cut built with 2.132.6, not a certified pair.

Open items

  1. Budget coordinator: this moves the Budget-day baseline HBAI income and poverty rates, though no costing. It reaches the numbers only if it is in the pe-uk the final cut locks.
  2. Design choice for the reviewer: a positive profit with larger costs counts as nil, not a loss, as property_income_after_finance_costs already does for the means tests. Both data pipelines count an FRS RentProf loss as zero.
  3. Not in scope: FRS ROYYR1 also nets mortgage capital repayments (microcosm experiments/1106 C11 item 3). The model takes off interest only.
  4. Axiom: n/a, since these are statistical measures. No rulespec-uk module covers HBAI.

@MaxGhenis
MaxGhenis added this pull request to the merge queue Oct 22, 2026
@juaristi22 juaristi22 mentioned this pull request Oct 22, 2026
Open
Merged via the queue into main with commit 9458c43 Oct 22, 2026
20 of 22 checks passed
@MaxGhenis
MaxGhenis deleted the fix-2390-hbai-property-income branch October 22, 2026 14:37
@MaxGhenis

MaxGhenis commented Oct 22, 2026

Copy link
Copy Markdown
Collaborator Author

Merged by the UK hub (session local_8e19f9d5, Opus 5.5) on its merge gates. One merge-queue enqueue, pinned to head e34eb57bc2e3cf997889b6650658f948284b9bbd.

  • Change: hbai_household_net_income, market_income and household_market_income add property_income_after_finance_costs instead of property_income, so landlords' mortgage interest no longer counts as income (FRS PropRent is asked net of loan interest; ITTOIA 2005 s.272A, s.274A). Fixes HBAI and market income should read property income after finance costs #2390.
  • Review: GPT-6.1 Sol APPROVE at this exact head (~/reviews/uk-hub/reviews/uk2564/REVIEW_2564.md). It agreed the net basis is right for all three measures and confirmed no tax base or means test reads them. It asked to narrow the PR's "no Budget costing reads these totals" claim (private-school imputation, the opt-in labour dynamics and the decile-based spending allocators can move when switched on), and the hub corrected the body. The nil floor on property losses is an inherited helper convention, not a survey-validated HBAI rule; that's noted as a limitation.
  • Impact: baseline tax, benefits and the government balance unchanged. On Microcosm interim data, HBAI household income −£9.33bn in 2026 (−0.61%) and market income −£9.35bn; absolute poverty +0.08pp BHC / +0.16pp AHC; relative poverty −0.26pp / −0.10pp. The certified uk-data 1.58.1 report shows no change, since that file has no finance-cost data.

🤖 Generated with Claude Code

Sign up for free to join this conversation on GitHub. Already have an account? Sign in to comment

Reviewers

No reviews

Assignees

No one assigned

Labels

None yet

Projects

None yet

Milestone

No milestone

Development

Successfully merging this pull request may close these issues.

HBAI and market income should read property income after finance costs

1 participant

@MaxGhenis