Fix PolicyBench audit issues (#1690)

Author: MaxGhenis

changelog.d/1681.md

@@ -0,0 +1 @@
+- Fixed PolicyBench audit issues in Pension Credit, Capital Gains Tax, and income-tax source ordering, including mixed-age Pension Credit eligibility, property income in Pension Credit, CGT rate-band allocation, savings/dividend ordering, HICBC regression coverage, and property income-tax banding.

policyengine_uk/parameters/gov/dwp/pension_credit/guarantee_credit/income.yaml

@@ -14,6 +14,7 @@ values:
   - working_tax_credit
   - state_pension
   - private_pension_income
+  - property_income
   - pension_credit_deemed_income
   - esa_contrib
   - jsa_contrib

policyengine_uk/tests/policy/baseline/finance/tax/income_tax/savings_starter_rate_income.yaml

@@ -2,6 +2,8 @@
   period: 2024
   input:
     basic_rate_savings_income_pre_starter: 5_000
+    taxable_savings_interest_income: 6_000
+    received_allowances_savings_income: 0
     earned_taxable_income: 15_000
     taxable_dividend_income: 0
   output:
@@ -11,6 +13,8 @@
   period: 2024
   input:
     basic_rate_savings_income_pre_starter: 4_000
+    taxable_savings_interest_income: 5_000
+    received_allowances_savings_income: 0
     earned_taxable_income: 19_000
     taxable_dividend_income: 0
   output:
@@ -20,7 +24,9 @@
   period: 2024
   input:
     basic_rate_savings_income_pre_starter: 2_000
-    earned_taxable_income: 22_000
+    taxable_savings_interest_income: 3_000
+    received_allowances_savings_income: 0
+    earned_taxable_income: 23_000
     taxable_dividend_income: 1_000
   output:
     savings_starter_rate_income: 0
@@ -29,6 +35,8 @@
   period: 2024
   input:
     basic_rate_savings_income_pre_starter: 10_000
+    taxable_savings_interest_income: 11_000
+    received_allowances_savings_income: 0
     earned_taxable_income: 16_000
     taxable_dividend_income: 0
   output:
@@ -38,7 +46,9 @@
   period: 2024
   input:
     basic_rate_savings_income_pre_starter: 5_000
+    taxable_savings_interest_income: 6_000
+    received_allowances_savings_income: 0
     earned_taxable_income: 16_000
     taxable_dividend_income: 2_000
   output:
-    savings_starter_rate_income: 4_570
+    savings_starter_rate_income: 5_000

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

@@ -1,22 +1,77 @@
-- name: Not pension-age, ineligible for Pension Credit (single)
-  period: 2022
+- name: Case 1, single adult below State Pension age is ineligible.
+  period: 2026
   input:
     people:
-      person:
-        is_SP_age: false
+      person1:
+        age: 54
+    benunits:
+      benunit:
+        members: [person1]
+  output:
+    is_pension_credit_eligible: false
+
+- name: Case 2, single adult above State Pension age is eligible.
+  period: 2026
+  input:
+    people:
+      person1:
+        age: 79
+    benunits:
+      benunit:
+        members: [person1]
+  output:
+    is_pension_credit_eligible: true
+
+- name: Case 3, couple with both adults above State Pension age is eligible.
+  period: 2026
+  input:
+    people:
+      person1:
+        age: 79
+      person2:
+        age: 70
+    benunits:
+      benunit:
+        members: [person1, person2]
+  output:
+    is_pension_credit_eligible: true
+
+- name: Case 4, mixed-age couple without protected exception is ineligible.
+  period: 2026
+  input:
+    people:
+      person1:
+        age: 79
+      person2:
+        age: 54
+    benunits:
+      benunit:
+        members: [person1, person2]
   output:
     is_pension_credit_eligible: false
 
-- name: One member of a couple is pension age; eligible for Pension Credit
-  period: 2022
+- name: Case 5, child in benefit unit does not block pension-age adult eligibility.
+  period: 2026
   input:
     people:
-      person:
-        is_SP_age: false
-      spouse:
-        is_SP_age: true
+      person1:
+        age: 79
+      person2:
+        age: 10
     benunits:
       benunit:
-        members: [person, spouse]
+        members: [person1, person2]
   output:
     is_pension_credit_eligible: true
+
+- name: Case 6, child-only benefit unit is ineligible.
+  period: 2026
+  input:
+    people:
+      person1:
+        age: 10
+    benunits:
+      benunit:
+        members: [person1]
+  output:
+    is_pension_credit_eligible: false

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

@@ -58,3 +58,25 @@
     pension_credit_assessable_capital: 10_001
     pension_credit_deemed_income: 52
     pension_credit_income: 52
+
+- name: Case 4, property income and non-main-home capital count for Pension Credit.
+  period: 2026
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 79
+        property_income: 10_476
+    benunits:
+      benunit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        other_residential_property_value: 55_370
+        savings: 455
+  output:
+    pension_credit_assessable_capital: 55_825
+    pension_credit_deemed_income: 4_784
+    pension_credit_income: 15_260
+    pension_credit: 0

policyengine_uk/tests/policy/baseline/gov/hmrc/capital_gains_tax/capital_gains_tax.yaml

@@ -28,15 +28,15 @@
     adjusted_net_income: 20_000
     capital_gains: 23_000
   output:
-    capital_gains_tax: 2_230
+    capital_gains_tax: 2_000
 
 - name: Higher rate capital gains tax
   period: 2024
   input:
     adjusted_net_income: 50_000
     capital_gains: 50_000
   output:
-    capital_gains_tax: 9_400
+    capital_gains_tax: 9_373
 
 - name: Additional rate capital gains tax
   period: 2024
@@ -52,15 +52,15 @@
     adjusted_net_income: 35_000
     capital_gains: 40_000
   output:
-    capital_gains_tax: 7_130
+    capital_gains_tax: 5_873
 
 - name: High capital gains, low income
   period: 2024
   input:
     adjusted_net_income: 10_000
     capital_gains: 200_000
   output:
-    capital_gains_tax: 36_630
+    capital_gains_tax: 35_630
 
 - name: Very high capital gains and income
   period: 2024
@@ -76,4 +76,50 @@
     adjusted_net_income: 0
     capital_gains: 3_000
   output:
-    capital_gains_tax: 0
+    capital_gains_tax: 0
+
+- name: Case 11, two adults each receive the annual exempt amount.
+  period: 2026
+  input:
+    people:
+      person1:
+        capital_gains: 151_800
+      person2:
+        capital_gains: 151_800
+    benunit:
+      members: [person1, person2]
+  output:
+    capital_gains_tax: [33_450, 33_450]
+
+- name: Case 12, ordinary income below allowances leaves the full basic rate band for gains.
+  period: 2026
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        adjusted_net_income: 9_324
+        capital_gains: 228_890
+      person2:
+        capital_gains: -124_972
+    benunit:
+      members: [person1, person2]
+  output:
+    capital_gains_tax: [51_951.60, 0]
+
+- name: Case 13, Gift Aid extends the basic rate band for capital gains.
+  period: 2018
+  input:
+    adjusted_net_income: 41_850
+    gift_aid: 40_000
+    capital_gains: 70_000
+  output:
+    capital_gains_tax: 6_210
+
+- name: Case 14, personal pension contributions extend the basic rate band for capital gains.
+  period: 2026
+  input:
+    employment_income: 52_570
+    personal_pension_contributions: 10_000
+    capital_gains: 30_000
+  output:
+    capital_gains_tax: 6_018

policyengine_uk/tests/policy/baseline/gov/hmrc/income_tax/charges/child_benefit_hitc.yaml

@@ -27,3 +27,26 @@
     employment_income: 60_000
   output:
     CB_HITC: 1_000
+
+- name: Case 5, high-income family pays one full Child Benefit charge.
+  period: 2026
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        self_employment_income: 113_850
+      person2:
+        age: 38
+        employment_income: 35_000
+      person3:
+        age: 8
+      person4:
+        age: 5
+    benunit:
+      members: [person1, person2, person3, person4]
+  output:
+    child_benefit: 2_328.16
+    CB_HITC: [2_328.16, 0, 0, 0]
+    income_tax_pre_charges: [35_142, 4_486, 0, 0]
+    income_tax: [37_470.16, 4_486, 0, 0]

policyengine_uk/tests/policy/integration/income.yaml

@@ -22,9 +22,9 @@
   output:
     basic_rate_savings_income_pre_starter: 10_000
     savings_starter_rate_income: 0
-    basic_rate_savings_income: 10_000
+    basic_rate_savings_income: 9_500
     savings_allowance: 500
-    higher_rate_savings_income: 4_500
+    higher_rate_savings_income: 5_000
     taxed_savings_income: 14_500
 
 - name: Dividends taxed at the marginal rates
@@ -35,7 +35,73 @@
     # Nullify Personal Allowance for testing purposes
     gov.hmrc.income_tax.allowances.personal_allowance.amount: 0
   output:
-    dividend_income_tax: 6_225
+    dividend_income_tax: 6_725
+
+- name: Savings and dividend allowances occupy tax bands before taxable income.
+  period: 2027
+  absolute_error_margin: 0.01
+  input:
+    employment_income: 50_000
+    savings_interest_income: 1_000
+    dividend_income: 1_000
+  output:
+    earned_taxable_income: 37_430
+    savings_allowance: 500
+    basic_rate_savings_income: 0
+    higher_rate_savings_income: 500
+    savings_income_tax: 210
+    taxed_dividend_income: 500
+    dividend_income_tax: 178.75
+    income_tax: 7_874.75
+
+- name: Personal allowance caps savings starter rate before dividends.
+  period: 2027
+  absolute_error_margin: 0.01
+  input:
+    employment_income: 10_000
+    savings_interest_income: 5_000
+    dividend_income: 5_000
+  output:
+    received_allowances_savings_income: 2_570
+    basic_rate_savings_income_pre_starter: 2_430
+    savings_starter_rate_income: 2_430
+    savings_allowance: 1_000
+    savings_income_tax: 0
+    taxed_dividend_income: 4_500
+    dividend_income_tax: 483.75
+    income_tax: 483.75
+
+- name: Starter-rate savings applies before personal savings allowance.
+  period: 2027
+  absolute_error_margin: 0.01
+  input:
+    employment_income: 12_570
+    savings_interest_income: 5_500
+  output:
+    basic_rate_savings_income_pre_starter: 5_500
+    savings_starter_rate_income: 5_000
+    savings_allowance: 1_000
+    basic_rate_savings_income: 0
+    savings_income_tax: 0
+    income_tax: 0
+
+- name: Property income uses post-allowance rate bands.
+  period: 2026
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        taxable_property_income: 75_900
+        savings_interest_income: 2_900
+      person2:
+        taxable_property_income: 46_451
+        savings_interest_income: 1_525
+    benunit:
+      members: [person1, person2]
+  output:
+    property_income_tax: [17_792, 6_776.20]
+    savings_income_tax: [0, 0]
+    income_tax: [17_792, 6_776.20]
 
 - name: Household net income can be negative
   period: 2020
@@ -45,4 +111,4 @@
     household_tax: 2
     household_benefits: 0
   output:
-    household_net_income: -1
+    household_net_income: -1