Give Scotland and Wales working-age council tax reduction their own rules (UC routes, passport, child amounts)

[MaxGhenis]

Fixes #1962. Also closes #1935 for Scotland and Wales.

axiom: SSI 2021/249 regs 13(11), 35, 42, 57(1)(p); WSI 2013/3029 Sch 6 paras 3, 9, Sch 7 paras 1-4, Sch 9 and 10 para 8 | TheAxiomFoundation/rulespec-uk#393 queued

What was wrong

Working-age households in Scotland and Wales ran through the pension-age means test, built on Housing Benefit parameters. On main in 2026, simulated working-age CTR was:

• Scotland: £0.046bn (0.059m households), against £0.134bn reported in the FRS;
• Wales: £0.000bn, against £0.067bn reported.

Four legal defects caused it:

1. Universal Credit. The whole UC award, including the housing costs element, counted as income against a Housing Benefit personal allowance with no children in it. The law is different in each country:
   • Wales (WSI 2013/3029 Sch 6 paras 3 and 9) compares the Secretary of State's UC income plus the award with the UC maximum amount. The housing and child elements cancel, and a UC claimant with no earnings gets the maximum reduction.
   • Scotland (SSI 2021/249 regs 35, 42, 57(1)(p) and (2)(d)) keeps its own applicable amount. It counts as income only the UC child element (with disabled-child additions) plus the childcare costs element, capped at the award. Earnings are measured on the UC basis with the CTR earnings disregards and no work allowance.
2. No passport. Claimants on Income Support, income-based JSA or income-related ESA were means-tested. The law gives them the maximum reduction: SSI 2021/249 reg 13(11); WSI 2013/3029 Sch 9 para 8 and Sch 10 para 8.
3. Applicable amounts.
   • There were no child amounts: Scotland's child premium is £109.85 per child (25% above Housing Benefit since 2017), Wales's child amount £87.88.
   • There was no family premium: £20.22 in Wales, and in Scotland until it closed to new claims on 1 May 2016.
   • There was no disabled child premium or child enhanced disability premium.
   • Welsh personal allowances were Housing Benefit's (£95.55 / £75.65 / £150.15) instead of Wales's own (£101.85 / £80.60 / £159.85).
   • The adult premiums were the projected DWP amounts, not the devolved ones, which differ in most years (2025-26 disability premium: £47.48 projected against £43.20 in law).
   • The carer premium was paid once for a couple even when both qualify.
4. Income.
   • Child Benefit was counted; both countries disregard it.
   • There were no earnings disregards (£5, £10, £20 or £25, plus £17.10), no childcare deduction and no tariff income from capital.
   • Actual interest, dividends and rent were counted, where the law treats them as capital.

What this changes

simulated_council_tax_reduction_benunit sends a family down a new working-age route when it is in Scotland or Wales and council_tax_reduction_pensioner is false. The new variables are in council_tax_reduction/working_age/:

Variable	Rule
council_tax_reduction_devolved_working_age	Scotland or Wales, not a CTR pensioner. Mixed-age UC couples take this route (WSI 2013/3029 reg 3; SSI 2021/249 reg 3).
council_tax_reduction_working_age_applicable_amount	Wales with UC: uc_maximum_amount. Otherwise: personal allowance, child amounts, and the adult premiums (benefits_premiums).
council_tax_reduction_working_age_personal_allowance	Couple / lone parent / single 25+ / single under 25. The higher single rate also applies on main-phase ESA and, in Scotland, on UC with LCW.
council_tax_reduction_working_age_child_amounts	Per-child amount, family premium, disabled child premium, child enhanced disability premium.
council_tax_reduction_working_age_adult_premiums, _carers	Disability, severe disability, enhanced disability premiums at the devolved amounts (who qualifies follows the legacy premium variables), and a carer premium for each claimant or partner on Carer's Allowance or Carer Support Payment (Scotland: also the UC carer element).
council_tax_reduction_working_age_applicable_income	Passported: 0. Wales with UC: UC earnings before the work allowance + UC unearned income + the award. Otherwise: net earnings − disregards − childcare + unearned income + tariff income (+ relevant UC payments in Scotland).
council_tax_reduction_working_age_person_earned_income, _earned_income, _employed_earned_income, _unabsorbed_tax	Per claimant/partner: UC-basis earnings (all pension contributions deducted) or legacy earnings (half), plus SSP/SMP/SPP, less their own tax and NI. Employed earnings feed Scotland's £17.10 test. Tax the earnings can't absorb is disregarded from unearned income in Wales (Sch 9 para 4).
council_tax_reduction_working_age_earnings_disregard	£25 lone parent; else £20 with a disability premium; else, with a carer premium, £20 of the carers' own earnings plus up to £10 of a non-carer partner's (paras 6-7); else £10 couple, £5 single. Plus £17.10 on the work conditions (not with UC): a couple's disabled member must be the one in work, and in Scotland from April 2022 only employed earnings qualify. Never more than earnings.
council_tax_reduction_working_age_unearned_income	The closed lists in reg 57(1) and Sch 6 para 17 / Sch 9: pensions, contributory ESA and JSA, carer's allowance, the Carer Support Payment component (not the Scottish Carer Supplement), MA, IIB, IB, SDA, tax credits.
council_tax_reduction_relevant_universal_credit_payments	Scotland: min(child element + disabled-child additions + childcare element, award).
council_tax_reduction_working_age_childcare_deduction	Legacy: charges up to £175 / £300 a week when the lone parent, or both of a couple, work 16 hours or more, taken off earnings after the disregards. Scotland with UC: childcare element ÷ 0.85, up to £290 / £497, taken off income.
council_tax_reduction_working_age_capital, _tariff_income	Wales with UC: UC capital. Wales passported: 0. Otherwise household savings. £1 a week per £250 or part above £6,000.
council_tax_reduction_working_age_passported, _has_universal_credit, _universal_credit_award	IS / JSA(IB) / ESA(IR) without UC; UC entitlement; the award after the benefit cap and before deductions from payment.

The new parameters are under gov.local_authorities.{scotland,wales}.council_tax_reduction.working_age. Every amount has its full history from 2013-14 to 2026-27, and each change cites the amending instrument and provision. The history was compiled from legislation.gov.uk and chain-checked: each year's "for £X" equals the previous year's value. Welsh 2013-14 values come from the revoked WSI 2012/3144, which then applied.

Pension-age CTR, the English schemes and the Housing Benefit parameters are unchanged. The only other file touched is the Scotland/Wales hook in simulated_council_tax_reduction_benunit.py.

council_tax_reduction_pensioner.py is #1944's file at d420697, with one sentence of its documentation changed: "the Welsh and Scottish formulas do not yet use it" is no longer true after this PR. The name, entity and formula are identical. Whichever PR merges second resolves the add/add conflict, keeping #1944's comments and this documentation sentence.

Stacking and conflicts

• Base. The base is remove-is-child-flags (Replace generic child and adult flags with each programme's legal definitions #1896), which is approved and awaiting merge. The child amounts count Replace generic child and adult flags with each programme's legal definitions #1896's is_child_or_young_person_for_legacy_benefits, and the family types use its legal definitions. Retarget to main once Replace generic child and adult flags with each programme's legal definitions #1896 merges.
• Disregard guarantee credit recipients' income and capital in pensioner council tax reduction #1909 edits simulated_council_tax_reduction_benunit.py (capital routing) and the CTR line in programs.yaml. Whichever merges second resolves those. The routes are independent: Disregard guarantee credit recipients' income and capital in pensioner council tax reduction #1909 is pension-age, this is working-age.
• Evaluate claims_all_entitled_benefits per benefit unit #1831 / d046 (take-up) is untouched. In survey runs, CTR claiming is still reported receipt.

Impact (Enhanced FRS 2024-25, real microsimulation runs)

CTR in £bn (recipient households, millions). Base = #1896 head f981459; this PR = 3cecb6b. Later commits change only documentation and #1896's test fix. Groups are by the household-head benefit unit's pension status (council_tax_reduction_household_has_pensioner).

Group	2025 base → PR	2026 base → PR	2027 base → PR	2029 base → PR
Scotland, working age	0.045 (0.059) → 0.132 (0.186)	0.046 (0.059) → 0.133 (0.183)	0.049 (0.059) → 0.140 (0.187)	0.052 (0.056) → 0.154 (0.188)
Wales, working age	0.000 (0.001) → 0.009 (0.009)	0.000 (0.001) → 0.009 (0.009)	0.001 (0.003) → 0.011 (0.014)	0.001 (0.003) → 0.014 (0.014)
Scotland, pension age	0.205 (0.240) → 0.205 (0.240)	0.213 (0.241) → 0.213 (0.241)	0.222 (0.242) → 0.222 (0.242)	0.240 (0.244) → 0.240 (0.244)
Wales, pension age	0.015 (0.019) → 0.015 (0.019)	0.017 (0.020) → 0.017 (0.020)	0.019 (0.020) → 0.019 (0.021)	0.022 (0.020) → 0.022 (0.020)
England, pension age	0.676 (0.639) → 0.676 (0.639)	0.716 (0.642) → 0.716 (0.642)	0.764 (0.644) → 0.764 (0.644)	0.862 (0.661) → 0.862 (0.661)
England, working age (reported)	1.342 (2.493) → 1.342 (2.493)	1.347 (2.503) → 1.347 (2.503)	1.352 (2.512) → 1.352 (2.512)	1.363 (2.533) → 1.363 (2.533)
UK total CTR	2.290 (3.463) → 2.386 (3.598)	2.346 (3.478) → 2.443 (3.610)	2.414 (3.494) → 2.515 (3.633)	2.548 (3.530) → 2.663 (3.674)

• CTR rises by:
  • 2025: +£0.096bn, 0.184m gaining households (mean £520 a year), 0.000m losing
  • 2026: +£0.097bn, 0.157m gaining households (mean £619 a year), 0.000m losing
  • 2027: +£0.101bn, 0.166m gaining households (mean £612 a year), 0.000m losing
  • 2029: +£0.115bn, 0.166m gaining households (mean £692 a year), 0.000m losing
• Household net income rises by the same amount as CTR, to within £0.06 per household.
• Pension-age CTR in all three countries, English working-age CTR and Northern Ireland are identical to the base in every year run.
• In 2026 FRS-original rows carry £0.086bn of the £0.088bn Scottish rise, and SPI-synthetic rows £0.002bn.
• The Enhanced FRS 2024-25 (release 1.56.16) has no weights before 2024, so earlier years cannot be run on it. Three YAML cases check the 2015, 2016 and 2018 amounts instead.
• After 2026-27 the devolved amounts are CPI-projected (gov.benefit_uprating_cpi), as the Housing Benefit amounts are.

Why the gap to reported and official figures remains (data, not law)

Filed as PolicyEngine/policyengine-uk-data#496 and #497:

• council_tax is the FRS bill net of CTR. DWP defines the FRS 2024-25 CTANNUAL as "Annual CT amount after discounts/reduction", derived from CTREB and CTREBAMT. The model treats it as the gross liability, so each reported recipient's liability is already reduced by its own CTR. 41.5% of Welsh working-age reported recipients have a £0 bill.
  • A diagnostic dataset copy (not a release) adds reported CTR back to FRS-original rows. With this PR on that copy, 2026 CTR is:
    • Scotland working-age: £0.201bn (0.192m households);
    • Wales working-age: £0.045bn (0.036m).
  • On the same copy, main gives £0.077bn and £0.008bn.
• SPI-synthetic rows carry imputed "reported" CTR from the stage-2 QRF. That imputed CTR sits on £78k-£90k earners, and every person in the household carries it.
• Take-up. Only FRS reporters claim CTR in survey runs (Evaluate claims_all_entitled_benefits per benefit unit #1831, d046). Wales has 0.056m FRS-original working-age reporters, against 157k working-age CTR households in March 2026.

Group, 2026	This PR, release data	This PR, gross-bill diagnostic data	FRS reported	Official
Scotland, working age	£0.133bn (0.183m)	£0.201bn (0.192m)	£0.134bn (0.342m)	about £0.276bn and 306,740 recipients (March 2026)¹
Wales, working age	£0.009bn (0.009m)	£0.045bn (0.036m)	£0.067bn (0.107m)	157,021 households (March 2026); all ages £347.4m (2025-26), £336.0m budgeted (2026-27)²
England, pension age	£0.716bn (0.642m)	£1.026bn (0.802m)	£0.529bn (1.186m)	£1.816bn forgone (2025-26), 1,349,524 claimants (31 March 2026)³

1. Council Tax Reduction in Scotland, 2025-26 (gov.scot):
   • £425.1m provisional income forgone in 2025-26; 458,950 recipients in March 2026.
   • Working-age recipients = the total less pension-age recipients (sheet 2.6).
   • £0.276bn is the under-65 share of the £425.1m, derived from the average weekly awards by age (sheet 3.3). No split by age is published.
2. Welsh Government, Council Tax Reduction Scheme annual report 2025 to 2026; StatsWales revenue budget (CTRS) 2026-27.
3. MHCLG Council Taxbase 2025, CT Support sheet; Local Council Tax Support claimants live table, Q1 2026-27.

Not modelled (documented in the variables)

• Components and premium conditions. The ESA work-related activity and support components are not modelled, and the disability premium's LCW/LCWRA exclusion is not applied. Who qualifies for the adult premiums follows the model's legacy premium variables (Give pension-age HB and CTR the severe disability premium Pension Credit uses #1938 and Give the legacy severe disability premium its statutory conditions (stacked on #1896) #1946 are revising their conditions); the amounts are the devolved ones.
• Tax credits. The childcare deduction's extension to earnings plus WTC/CTC, and the up-to-£17.10 WTC disregard, are not modelled; tax credits ended in April 2025.
• Mid-year changes. Amounts that change mid-year (for example the Scottish UC childcare caps from 28 June 2023) apply from the next model year, because the model samples one value a year.
• Fixed amounts before the current instruments. The disregards, tariff income, childcare caps and hours parameters cite SSI 2021/249 and WSI 2013/3029 from 2013. The predecessor schemes (SSI 2012/303, WSI 2012/3144) are not separately cited, and Scotland's April-September 2013 tariff-income threshold for applicants aged 60 or over is not modelled.
• Transitional family premium. Scotland's is not modelled, because the model cannot see an unbroken claim since May 2016.
• Scotland-only routes. The band E-H alternative maximum (reg 14) and the second adult rebate are not modelled.
• Scotland before April 2022. Its UC rules under SSI 2012/303 are approximated with the 2021 scheme's structure. The UC childcare caps before 2022 take the 2022 value (£175 / £300), the same as the non-UC caps.
• Exclusions and liability splits. Students, persons from abroad, and the division of joint liability are not modelled.
• Non-dependant deductions still use Housing Benefit amounts, with no exemptions. That is National council tax reduction: non-dependant deductions use Housing Benefit amounts and skip exemptions; pensioner gate ignores benefit exclusions #1934, a separate PR to follow.
• Capital is household savings (Pensioners without Pension Credit are tested on household savings only for the council tax reduction capital limit #1936).

Tests

• YAML. council_tax_reduction_devolved_working_age.yaml has 24 cases: the 15 below, plus 9 regression cases from the independent review (carer disregard, the £17.10 conditions, Welsh tax on unearned income, the CSP component, a carer premium per partner, SMP on the UC route, and the 2025 Scottish disability premium). Expected values are worked by hand from the 2026-27 amounts:
  • Wales UC with no earnings: full award;
  • Wales UC excess income = 0.45 × earnings with no work allowance;
  • the Wales UC award is the same at double the rent;
  • a Welsh couple with a child and no UC (Sch 7 amounts, disregards, Child Benefit ignored);
  • a Scottish UC lone parent counting only the child element;
  • a Scottish UC single earner (the £5 disregard, and no UC counted);
  • the Scottish under-25 allowance;
  • the ESA passport in both countries;
  • Scotland's capital limit for a passported claimant;
  • tariff income;
  • a mixed-age UC couple in Wales on the working-age route.
• Property tests (Hypothesis). test_council_tax_reduction_devolved_working_age_properties.py runs many households in one simulation. It checks:
  • 0 ≤ award ≤ liability;
  • the Wales UC award does not depend on rent (uncapped awards);
  • the UC award never rises with earnings;
  • IS/JSA/ESA passported claimants get the full liability.
• Mutation check. Removing the Welsh UC route fails the rent property. Removing the passport fails the passport property.
• Outsider income. test_means_test_income_properties.py now also checks that the new working-age income never counts income from people outside the family.
• Suites. Local, on this branch:
  • policyengine-core test policyengine_uk/tests/policy: 1,489 passed.
  • pytest policyengine_uk/tests --ignore=policyengine_uk/tests/microsimulation: 1,809 passed, 13 skipped, 1 failed.
  • The one failure, test_carer_support_payment.py::test_csp_counts_for_pension_credit_carer_additions_and_blocks_severe_disability, is not from this PR. It fails identically on the base (Replace generic child and adult flags with each programme's legal definitions #1896 head f981459) and in Replace generic child and adult flags with each programme's legal definitions #1896's own CI Test job, and passes on main 44240bd.
  • CI runs only on PRs into main, so this PR gets checks after Replace generic child and adult flags with each programme's legal definitions #1896 merges.

Invariants

• 0 ≤ award ≤ liability.
• The award is non-increasing in earnings on the UC route.
• A Welsh UC award is independent of the housing costs element when there is no benefit cap.
• A passported claimant gets the full liability less non-dependant deductions.
• Pension-age CTR is identical to the base in every year run.

Effect on pensioner CTR (uk-triple-lock)

None. Pension-age CTR in England, Scotland and Wales is identical to the base in every year run (2025, 2026, 2027 and 2029), so uk-triple-lock's pensioner offsets are unaffected.

The one legal change on the pension side is that a mixed-age couple on UC in Scotland or Wales now takes the working-age route. At the moment that needs #1944's council_tax_reduction_pensioner, and the benefit units affected carry no measurable CTR in the survey.

🤖 Generated with Claude Code

[MaxGhenis]

Coordination note from #1992 (Scottish CTR counts Carer Support Payment, stacked on #1952).

council_tax_reduction_working_age_unearned_income here subtracts carer_support_payment × supplement / (rate + supplement). That assumes carer_support_payment includes the Scottish Carer Supplement, which is true on main today. #1952 makes carer_support_payment the CSP component only (csp.rate × 52) and adds a separate scottish_carer_supplement.

Once #1952 is in, this subtraction would remove £535.88 a year of genuine CSP in 2026 (4,495.40 × 11.70 / 98.15), understating income for every Scottish working-age carer. Whichever of #1952 and this PR merges second should drop the subtraction and count carer_support_payment as it stands.

The carers overlapping-benefits work (#1953) will also make carer_support_payment the amount payable after CSP Regs reg 16(2). SSI 2021/249 reg 57(1)(b) counts benefits "subject to any adjustment … under section 73 of the Social Security Administration Act 1992"; whether that covers a reg 16(2) reduction is being checked in #1992.

🤖 Generated with Claude Code

[MaxGhenis]

Composition note: #2015 (stacked on #2009 → #2006) adds council_tax_reduction_pensioner (BenUnit) with the same name, entity and meaning as this PR, but only the age test, and deletes council_tax_reduction_household_has_pensioner. Every CTR scheme now reads the per-family flag: national, the four _legacy councils, Oxford and council_tax_reduction_scheme_supported. Whichever lands second: keep this PR's formula for council_tax_reduction_pensioner.py (add/add), delete council_tax_reduction_household_has_pensioner.py (modify/delete), and change any remaining benunit.household("council_tax_reduction_household_has_pensioner", period) to benunit("council_tax_reduction_pensioner", period).