Merge pull request #1441 from PolicyEngine/edit-salary-sacrifice3

Edit salary sacrifice implementation

Author: vahid-ahmadi

.gitattributes

@@ -0,0 +1,3 @@
+
+# Use bd merge for beads JSONL files
+.beads/issues.jsonl merge=beads

policyengine_uk/parameters/gov/contrib/behavioral_responses/salary_sacrifice_broad_base_haircut_rate.yaml

@@ -0,0 +1,22 @@
+# The rate at which ALL workers' employment income is reduced due to the salary sacrifice cap.
+# When the salary sacrifice cap is active, employers face increased NI costs on excess contributions.
+# They spread these costs across ALL employees (not just affected workers), reducing everyone's pay.
+#
+# Calculation from blog (https://policyengine.org/uk/research/uk-salary-sacrifice-cap):
+# - Total excess above £2,000 cap: £13.8 billion
+# - Employer NI on excess (at 15%): £2.1 billion
+# - Total UK employment income: ~£1.3 trillion
+# - Broad-base haircut rate: £2.1bn / £1.3tn ≈ 0.0016 (0.16%)
+#
+# This is applied to ALL workers' employment income, not just salary sacrificers.
+# The economic logic: employers cannot target only affected workers (who would negotiate
+# to recoup the loss), so they spread the cost across all employees.
+description: Rate at which all workers' employment income is reduced when salary sacrifice cap is active.
+values:
+  2010-01-01: 0.0016
+metadata:
+  unit: /1
+  label: Salary sacrifice broad-base haircut rate
+  reference:
+    - title: PolicyEngine UK Salary Sacrifice Cap Analysis
+      href: https://policyengine.org/uk/research/uk-salary-sacrifice-cap

policyengine_uk/simulation.py

@@ -123,6 +123,10 @@ def __init__(
 
         self.move_values("capital_gains", "capital_gains_before_response")
         self.move_values("employment_income", "employment_income_before_lsr")
+        self.move_values(
+            "employee_pension_contributions",
+            "employee_pension_contributions_reported",
+        )
 
         self.input_variables = self.get_known_variables()
 

policyengine_uk/tests/microsimulation/reforms_config.yaml

@@ -16,15 +16,15 @@ reforms:
   parameters:
     gov.hmrc.child_benefit.amount.additional: 25
 - name: Reduce Universal Credit taper rate to 20%
-  expected_impact: -29.3
+  expected_impact: -29.4
   parameters:
     gov.dwp.universal_credit.means_test.reduction_rate: 0.2
 - name: Raise Class 1 main employee NICs rate to 10%
   expected_impact: 13.3
   parameters:
     gov.hmrc.national_insurance.class_1.rates.employee.main: 0.1
 - name: Raise VAT standard rate by 2pp
-  expected_impact: 20.7
+  expected_impact: 20.9
   parameters:
     gov.hmrc.vat.standard_rate: 0.22
 - name: Raise additional rate by 3pp