Count savings credit in Housing Benefit income where the Pension Credit award is savings credit only

[MaxGhenis]

Summary

Housing Benefit (HB) did not count Savings Credit (SC) for pensioners whose Pension Credit award is savings credit only, contrary to HB(SPC) Regs 2006 reg 27(4)(a). On a rise in private pension, three withdrawals then applied to the same pound:

• SC fell by 40% of the rise in net income;
• HB fell by 65% of the whole rise;
• Council Tax Reduction (CTR) fell by 20% of it.

Together they took more than the pound, so net income fell.

Reproduction on main for 2026 (single, aged 88, blind, Attendance Allowance higher rate, State Pension £11,609.88, council rent £11,117.22, council tax £2,782.16, no savings), with private pension rising from £9,000 to £9,500:

	main	this PR
Income tax	+100.00	+100.00
Savings credit	−73.29 (to 0)	−73.29
HB applicable income	+400.00	+326.71
Housing Benefit	−260.00	−212.36
CTR	−80.00	−80.00
Net income, excluding the TV licence	−13.29	+34.35

The TV licence also rises by £90 (the over-75 concession needs Pension Credit, and the blind concession halves it). That is a genuine statutory cliff, so it is excluded.

Law (legislation.gov.uk, current revised text, read 2026-09-30)

SI 2006/214 reg 27 (NI: SR 2006/406 reg 25), "Calculation of claimant's income and capital in savings credit only cases":

• (1) For a claimant who has, or whose partner has, "an award of state pension credit comprising only the savings credit", the authority uses the Secretary of State's calculation or estimate of income and capital for that award.
• (4) The authority modifies that net income "only in so far as necessary to take into account":
  • (a) the savings credit payable;
  • (b) childcare charges under reg 30(1)(c);
  • (c) the higher amounts HB disregards for (i) a lone parent's earnings and (ii) maintenance;
  • (d) the Sch 4 para 5A and 9(1) disregards;
  • (e) a partner outside the Pension Credit assessment;
  • (f) reg 24 (a non-dependant's income treated as the claimant's);
  • (g) local modifications under s.134(8) of the Administration Act. In NI, (g) is instead any income over £10 disregarded under Sch 6 para 1.
• (5) Regs 29 to 49 do not apply to the Secretary of State's figure, except to work out the (4) modifications.
• (6) Capital is the Secretary of State's calculation, and reg 43 (the £16,000 limit) applies to it.
• (7)-(8) The authority recalculates capital itself where it rises above £16,000 during an assessed income period.

SPC Regs 2002 Sch VI (the Pension Credit earnings disregards the Secretary of State's figure is net of):

• £20 for a lone parent (para 1);
• £20 for specified employments, carers and disabled people (paras 2 to 4);
• otherwise £5 single or £10 couple (para 5).

HB(SPC) Sch 4 has £25 for a lone parent (para 2), the same £20 and £5/£10 disregards, and the additional £17.10 (para 9(1)). Pension Credit has no counterpart to the £17.10.

Change

• New housing_benefit_savings_credit_only_income: pension_credit_income + pension_credit (the savings credit payable; under the Pension Credit freeze, the frozen award) − housing_benefit_applicable_income_childcare_element − housing_benefit_applicable_income_disregard, floored at 0.
  • The model's pension_credit_income disregards no earnings. The Secretary of State's figure is after the Sch VI disregards, and reg 27(4)(c)(i) and (d) take off the higher HB amounts on top. Deducting the whole HB disregard therefore gives the same result wherever the HB disregard the model computes is at least the Sch VI one. The model computes the £25, £5/£10 and £17.10 disregards, and neither programme's £20 cases.
• housing_benefit_applicable_income uses it where in_receipt_of_savings_credit_only. That variable is copied byte-for-byte from Disregard guarantee credit recipients' income and capital in pensioner council tax reduction #1909 (sha256 3ea1f1b8…8996).
• housing_benefit_assessable_capital uses pension_credit_assessable_capital for these families (reg 27(6)), so the £16,000 limit applies to the Pension Credit capital. That capital is split across pension-age adults only, not across all the household's adults.
• housing_benefit_tariff_income is 0 for them (reg 27(5)). The Pension Credit income already includes the deemed income from capital, so capital income is counted once.

Not modelled, and documented on the variable:

• maintenance (neither income definition counts it);
• the exempt-work disregard (para 5A);
• the income and capital of a partner outside the Pension Credit assessment (27(4)(e)), and a non-dependant's income treated as the claimant's (27(4)(f));
• war pensions (27(4)(g): local schemes in GB, and in NI war pension income over £10); the model has no war pension income;
• the assessed-income-period recalculation of capital (27(7)-(8)).

Inherited limits, also documented:

• The £20 earnings disregards. Neither programme models its £20 disregards for disabled people, carers and some occupations (SPC Sch VI paras 2 to 4; HB Sch 4 paras 3 to 5). For those earners this route's income is too high by £15 a week (single) or £10 (couple). If HB's £20 cases are added to housing_benefit_applicable_income_disregard, this route will need the Sch VI grounds instead.
• Childcare. The childcare element has no reg 31 work condition and no reg 30(1)(c) cap at earnings, as in the general route.
• Carer's Allowance. Pension Credit income in the model leaves it out, so this route does too; another session is adding it to Pension Credit income.

Invariants (tests)

test_housing_benefit_savings_credit_only_properties.py covers single people and couples aged 80 or over (so State Pension age was reached before April 2016). They have five disability states (none, AA lower or higher, DLA care middle, PIP daily living enhanced) and blind flags, State Pensions of £0 to £12,000 each, savings of £0 to £16,000 and council rents, in England, Wales and Scotland. Private pension runs on a £250 grid from £0 to £40,000, so every drawn family passes through savings credit only.

1. Monotonicity (the invariant this fixes): on every step on which the award is savings credit only at both ends, household net income excluding the TV licence does not fall. With HB counting SC, the combined withdrawal is 0.4 + 0.65 × 0.6 + 0.2 = 0.99. It falls to 0.91 once Disregard guarantee credit recipients' income and capital in pensioner council tax reduction #1909 has CTR count SC too. Fails on main; the shrunk counterexample is a single 80-year-old, private pension £14,000 → £14,250: SC −80, HB −130, CTR −40, net −50.
2. Boundary: on the step where SC ends, net income does not fall, excluding the TV licence, the Winter Fuel Payment and the Scottish Pension Age Winter Heating Payment. All three turn on receiving Pension Credit, a genuine statutory cliff. HB switches from the Secretary of State's figure to its own rules on that step.
3. Differential: an independent recomputation of each route from pensions, income tax and the statutory tariff on savings:
   • SC-only: Pension Credit income + SC − disregard, zero tariff income, capital = savings;
   • Guarantee Credit: zero;
   • otherwise: the HB rules.
4. The Attendance Allowance repro, and the Pension Credit freeze (a rate rise raises the reform's SC to £1,029.89, but HB counts the frozen £718.62 paid).

housing_benefit_savings_credit_only.yaml has 8 hand-computed cases. Cases 1 to 5 fail on main on substance: SC added; deemed income counted once; the £16,000 limit on Pension Credit capital for a couple with a non-dependant; the earnings disregard; a lone parent in work, with childcare charges, the £25 lone-parent disregard and the additional £17.10 disregard. Cases 6 to 8 are regression guards: Guarantee Credit plus SC keeps the passport; no Pension Credit; SC computed but not claimed.

Dataset impact (Enhanced FRS 2024-25, real runs of main 44240bd and this branch)

	2025	2026
Housing Benefit	−£3.67m	−£5.16m
Benefit units losing HB (all SC-only)	28.1k	25.6k
Largest loss (a year)	£396	£381
Records changed	20	16
Pension Credit, CTR, UC	0	0
Poverty (BHC and AHC, all and pensioners)	0.00pp	0.00pp

• Losers' HB applicable income rises by exactly their SC, so for them the Pension Credit and HB income definitions otherwise agree.
• In 2026, 3.3k benefit units lose HB eligibility on the Pension Credit capital, but none had any HB entitlement on main.
• Only 16 survey records change in 2026 (they come in pairs, the Enhanced FRS's duplicated records), so the aggregate rests on few observations.

Coordination

• Disregard guarantee credit recipients' income and capital in pensioner council tax reduction #1909 (pensioner CTR): in_receipt_of_savings_credit_only.py is byte-identical to Disregard guarantee credit recipients' income and capital in pensioner council tax reduction #1909's copy (sha256 3ea1f1b8…8996). Whichever merges first carries it; the other drops its copy on rebase. With Disregard guarantee credit recipients' income and capital in pensioner council tax reduction #1909, CTR also counts SC, and the combined withdrawal on savings-credit-only steps falls from 0.99 to 0.91.
• Key the Housing Benefit Guarantee Credit passport on receipt #1927 (GC passport on receipt): it rewrites the last lines of housing_benefit_applicable_income.py, housing_benefit_tariff_income.py and housing_benefit_assessable_capital.py, next to the lines added here, so git will report conflicts. Keep both sides: this PR's savings-credit-only lines, then Key the Housing Benefit Guarantee Credit passport on receipt #1927's passported = … in_receipt_of_guarantee_credit lines. The two routes are mutually exclusive: savings-credit-only receipt needs no guarantee credit.
• Take Housing Benefit earnings disregards from net earnings only #1908 (HB earnings disregards): no file overlap. This route deducts housing_benefit_applicable_income_disregard, so Take Housing Benefit earnings disregards from net earnings only #1908's corrected disregards (nil without earnings, £25 for a lone parent, £17.10 additional) flow through. The YAML sets that disregard as an input, so it passes in either merge order.
• Give pension-age HB and CTR the severe disability premium Pension Credit uses #1938 (pension-age severe disability premium): no file overlap. Its test docstring notes that full monotonicity fails because HB and CTR income leave out SC; this PR fixes the HB half, and Disregard guarantee credit recipients' income and capital in pensioner council tax reduction #1909 the CTR half.

TODO: sibling merge results from review.

axiom: uk/regulation/uksi/2006/214/27 TheAxiomFoundation/rulespec-uk#TODO queued

🤖 Generated with Claude Code

[vahid-ahmadi]

Reviewed: not ready (draft, and it needs #1908 to land first).

The approach follows SI 2006/214 reg 27(1), (4)(a), (5) and (6): Pension Credit income plus the savings credit payable, no HB tariff income, and the £16,000 limit applied to the Pension Credit capital.

1. Should fix housing_benefit_savings_credit_only_income.py:81. This subtracts housing_benefit_applicable_income_disregard, which on main is still the flat CPI-uprated £5/£10/£25 given whether or not anyone has earnings (Housing Benefit earnings disregard stacks the base disregard on top of the worker disregard (over-disregard vs SI 2006/213 Sch 4) #1794). Reg 27(4) allows only the higher HB earnings amounts. I ran this branch on its own with the Case 1 inputs (aged-80 single, no earnings) and no disregard override. It deducts £365.20, so income comes out at £13,267 instead of £13,632.62, and HB stays at the full £7,800. The YAML sets the disregard to 0 (housing_benefit_savings_credit_only.yaml:46 and the cases after it), so it can't catch this. Fix: mark the PR "depends on Take Housing Benefit earnings disregards from net earnings only #1908", merge Take Housing Benefit earnings disregards from net earnings only #1908 first, and add one case that doesn't override the disregard.
2. Should fix (description). The dataset section includes record-level survey details (the largest per-unit loss). Remove them and keep only aggregates.
3. Nit. Clear the draft TODOs ("sibling merge results", rulespec-uk#TODO).
4. Nit in_receipt_of_savings_credit_only.py:23-25. Under the PC freeze, receipt comes from the baseline but pension_credit_income comes from the reform. Add a docstring sentence saying this mix is intended.

Verified: I read reg 27 on legislation.gov.uk, and (1) and (4)–(6) match the PR. I ran the head (805e1cc) in a fresh environment: the new YAML passed 8/8 and the property tests passed 5/5. CI: all 6 checks pass.