Pay no Pension Credit child amount to a family with a tax credit award

[MaxGhenis]

Fixes #2060

Summary

child_minimum_guarantee_addition paid the State Pension Credit Regulations 2002 Schedule IIA amount for every child or qualifying young person, whether or not the family had a tax credit award. The law pays it only where there is no award: a Pension Credit claimant with Child Tax Credit or Working Tax Credit gets support for the child through the tax credit. The model paid both.

This PR withholds the Schedule IIA amount from a family with a tax credit award, and stops the amount being paid before Schedule IIA began on 1 February 2019.

Stacked on #2034 (tax-credits-pension-credit-passport, head 29891b0b5), which lifts the tax credit income test for Pension Credit. #2034 is stacked on #2027, #2013, #2001 and #1896.

Law (fetched verbatim from legislation.gov.uk /data.xml, 2026-10-02)

• SPC Regs 2002 reg 6(6)(d): "Except in a case to which paragraph (3) applies, an amount additional to that prescribed in paragraph (1) shall be applicable— ... (d) except where paragraph (11) applies, or entitlement ceases by virtue of paragraph (14), in accordance with Schedule IIA (additional amount applicable for claimants responsible for a child or qualifying young person)".
• Reg 6(11): "This paragraph applies in the case of a person who is awarded, or who is treated as having an award of, a tax credit under the Tax Credits Act."
• Reg 6(12): a person "is to be treated as having an award of a working tax credit with effect from the start of the current tax year even though a decision has not been made under section 14 of the Tax Credits Act in respect of a claim for that tax credit for that tax year, if the person was awarded a working tax credit for the previous tax year and any of the cases specified in paragraph (13) applies", and likewise for child tax credit. Reg 6(13) lists the cases: no final notice yet, or a final notice whose date has not passed or whose claim is undecided, or no section 18(1) decision.
• Reg 6(14): "Entitlement to the additional amount specified in Schedule IIA ceases where a person is awarded a tax credit in the circumstances specified in paragraph (15) or (16)" (a late renewal declaration, or a decision revised in the claimant's favour).
• Reg 6(17): "“a tax credit” includes a child tax credit and a working tax credit".
• Commencement: reg 6(6)(d), reg 6(11)-(17) and Schedule IIA were inserted from 1 February 2019 by SI 2018/676 reg 2(2)(c), (3) and (4).
• Schedule IIA paras 9 and 10: an amount "for each child or qualifying young person", and a higher amount for the eldest "born before 6th April 2017".
• TCA 2002 s.14(1), (3): "On a claim for a tax credit the Board must decide— (a) whether to make an award of the tax credit, and (b) if so, the rate at which to award it." "The Board's power to decide the rate at which to award a tax credit includes power to decide to award it at a nil rate."
• TCA 2002 s.3(1), (3)(a): entitlement "is dependent on the making of a claim for it", and a couple claims jointly.
• TCA 2002 s.7(1): entitlement depends on the relevant income not exceeding the threshold, or exceeding it "by only so much that a determination ... provides a rate of the tax credit".

DWP's guidance reads reg 6(11) the same way (DMG 78550): "They cannot be awarded a child addition in SPC if they have an ongoing award, or are treated as having an ongoing award, of tax credits." The explanatory memorandum to SI 2018/676 (para 7.5): "This additional amount will not be awarded if the claimant has an award of a tax credit."

The questions

What counts as an award. Reg 6(11) turns on being "awarded" a tax credit, which is HMRC's decision on a claim (s.14(1)), not on the amount paid. HMRC can award at a nil rate (s.14(3)). So the new has_tax_credit_award is true where the family claims a tax credit and meets its conditions other than the income test: would_claim_CTC and is_CTC_eligible, or would_claim_WTC and is_WTC_eligible.

The alternative, an award only where the amount is positive, also breaks #2034's rule. Take a family whose income-tested award is nil and whose Pension Credit is nil without the child amount. On that reading it would get the child amount, and so Pension Credit, while its tax credits stayed income-tested. But Pension Credit lifts the income test (SI 2002/2008 reg 4(1)(d)), which makes the award positive, which removes the child amount and the Pension Credit. No state is consistent. A YAML case covers this family.

Working tax credit alone. Reg 6(17) includes working tax credit, so a family claiming WTC but not CTC also gets no child amount. A YAML case covers it.

Couples. A couple claims tax credits jointly (s.3(3)(a)), so the award is the Pension Credit claimant's whichever partner claims. The model's benefit unit is both the tax credit claim and the Pension Credit claim.

Deemed awards and cessation (reg 6(12)-(16)). Not modelled. They treat last year's award as continuing during renewal, and end the child amount when an award is made late. Both change only part of a year, and the model's award is for the whole year. The code comment records this.

Commencement. Schedule IIA began on 1 February 2019. The model takes a year's rules at the start of the fiscal year, so the amount applies from 2019-20. Before this PR the model paid it from 2015-16: the rate parameters start on 1 February 2019, but after fiscal-year conversion they hold the 2019 rates for 2015 to 2018 (on the base, gov.dwp.pension_credit.guarantee_credit.child.first.addition is £63.84 for each of 2015 to 2019). The new parameter gov.dwp.pension_credit.guarantee_credit.child.in_effect is false until 1 February 2019.

After tax credits. Tax credits ended on 5 April 2025 (gov.dwp.tax_credits.active), so no family has an award from 2025-26 and the child amount is paid.

No dependency cycle

Pension Credit counts working tax credit as income (SPCA 2002 s.15(1)(b)), and #2034 makes the tax credit income test read Pension Credit, in a core branch. A child amount that read the award's amount would join that loop.

has_tax_credit_award reads only the claim and the entitlement conditions. Traced in a simulation, it reads 38 variables (ages, hours, couple status, education and training, disability, the reported awards and the Universal Credit claim) and none of Pension Credit, the tax credit amounts or the income test. So it is the same in #2034's passport branch as outside it, and the passport's rule is unchanged: it now decides on the Pension Credit payable without the child amount. In 2025-26 onward it returns false before reading anything.

Changes

• has_tax_credit_award (new, benefit unit): the award, as above; false once tax credits are inactive.
• child_minimum_guarantee_addition: nil where has_tax_credit_award, and nil while in_effect is false.
• gov.dwp.pension_credit.guarantee_credit.child.in_effect (new): false from 6 October 2003, true from 1 February 2019.
• Lift the tax credit income test for State Pension Credit #2034's YAML and Hypothesis examples no longer enter the child amount as 0 by hand.

Invariants (property-tested, Hypothesis)

For any family of one or two adults aged 40-90 with up to three children under 16, with earnings, hours, State Pension, private pension, savings, CTC and WTC claims, a Universal Credit claim and Pension Credit take-up:

1. Award. In 2019-20, 2021-22 and 2024-25, has_tax_credit_award equals the claim and entitlement conditions recomputed in the test.
2. Differential. The child amount is nil where there is an award. Otherwise it equals the amount in a second simulation with the award entered as absent. That amount equals an independent Schedule IIA calculation from the parameters (para 9(1)(a) for each child, para 10 for an eldest born before 2017).
3. No awards after tax credits. In 2025-26 and 2026-27 no family has an award, and the child amount is the Schedule IIA amount.
4. Commencement. In 2015-16 and 2018-19 the child amount is nil.
5. No gain. Withholding the child amount never raises Pension Credit plus WTC plus CTC, and changes nothing for a family with no award.
6. Order. Results are the same whichever of the child amount, the award, the income test, Pension Credit, the tax credits or household net income is requested first, with no dependency cycle.

tests/test_pension_credit_child_amount_tax_credit_properties.py: 4 properties (20 derandomized examples each) and a coverage test. The YAML households also run as explicit @examples, and test_yaml_families_reach_every_case checks they hit each case (CTC and WTC with Pension Credit, no claim, WTC alone, a nil-rate award). All 5 pass on a27a539ce (23 minutes on a loaded host).

The drawn families reach the rule. In 40 derandomized draws for 2024-25 (154 families):

• 101 have an award, and the child amount is withheld from 82;
• 28 of those 82 get different Pension Credit, and 20 still get some;
• 8 hold an award at a nil rate;
• 5 lose Lift the tax credit income test for State Pension Credit #2034's passport because the child amount is withheld;
• 20 with no award are paid the child amount.

Tests

YAML: 7 cases in tests/policy/baseline/gov/dwp/pension_credit/guarantee_credit/child_amount_tax_credit_award.yaml, each computed by hand from the law and DWP's published rates, with the arithmetic in comments:

1. a couple with Pension Credit, CTC and WTC in 2024-25: no child amount, the passport holds, Guarantee Credit £2,298.40;
2. the same couple with no tax credit claim: child amount 76.79 x 52 = £3,993.08;
3. a WTC award alone;
4. an award at a nil rate;
5. 2025-26, with tax credits ended;
6. 2019-20, with and without an award;
7. 2018-19, before Schedule IIA.

Two intermediate values the model gets wrong for unrelated reasons are entered at their statutory amounts, with comments: the CTC family element (£545) and the 2025-26 couple's standard minimum guarantee (£346.60 a week; #1925). Pension Credit earnings are entered net of the Sch VI para 5 disregard (#1954), as in #2034.

On the base 29891b0b5, all 7 new cases fail, and #2034's two CTC cases fail on value once their manual child amount is removed (Guarantee Credit of £1,826.48 and £1,262.68, expected nil).

Full suites on a27a539ce: YAML 1,584 passed. pytest PENDING.

Enhanced FRS impact

Real Microsimulation runs on a private copy of the Enhanced FRS 2024-25 (sha256 e433e532…), one per package state: base 29891b0b5 (#2034's head) and this branch a27a539ce, for 2024 and 2025. Aggregates only.

No amount paid changes in either year. Of 109 arrays compared per year (Pension Credit and its two credits, tax credits, Housing Benefit, Council Tax Reduction, Universal Credit, household net income, the poverty flags and each household benefit), 106 are identical in 2024 and all are identical in 2025.

2024-25:

	Benefit units (weighted)	Dataset records
With a tax credit award	30.2k	142
of which tax credits in payment	16.8k	83
of which awarded at a nil rate	13.4k	59
With an award and a non-zero child amount on the base	27.0k	126
of which entitled to Pension Credit	0	0
Pension Credit in payment with a child amount	2.2k	12
of which with an award	0	0

• The three arrays that change are intermediates: child_minimum_guarantee_addition, additional_minimum_guarantee and minimum_guarantee. The model computes them for every benefit unit with children, whether or not it can get Pension Credit. They fall for the 27.0k benefit units with an award (£234.7m in total), none of which is entitled to Pension Credit, so nothing paid moves.
• No family in the dataset has both Pension Credit and a tax credit award, which matches Lift the tax credit income test for State Pension Credit #2034's finding that none has both Pension Credit and tax credits.
• Pension Credit: 1.74m benefit units on both.

2025-26: no award (tax credits ended), and no array changes.

So on this dataset the fix is a correctness change for household calculations, with no aggregate effect. Years before 2024 were not run.

Run time and memory are unchanged (household net income 5.9 s base, 5.7 s branch in 2024; peak RSS 2.3 GB and 2.2 GB).

Axiom

axiom: TheAxiomFoundation/rulespec-uk#424 queued

rulespec-uk encodes both provisions (uk/regulations/uksi/2002/1792/6.yaml and schedule/IIA.yaml; checked origin/main 840c51f), but does not get this case right:

• 6.yaml has a rule for the reg 6(14)-(16) cessation and none for reg 6(6)(d), (11), (12) or (13). Its awarded_tax_credit_under_tax_credits_act input is read only by the cessation rule.
• schedule/IIA.yaml's additional_amount_applicable is paid whenever the claimant is responsible for a child, and is dated from 2026-04-06 only.
• uk/policies/govuk/pension-credit.yaml imports only the standard minimum guarantee from reg 6, so no child amount reaches the composed Pension Credit.

#424 holds the verbatim law, the required outputs, a pasteable review_finding and eleven companion tests from the same law and rates as this PR's YAML. The signed encoder run needs approval, so it is queued, not run.

Related and follow-ups

• Apply the 6 April 2017 child cutoffs by date of birth #1904 applies Schedule IIA para 10's 6 April 2017 cutoff by date of birth; it changes the top of the same formula, and this PR changes the end.
• Set DWP benefit rates to the announced amounts, not CPI projections #1925 sets the Schedule IIA rates for 2023-24 to 2025-26 to DWP's published amounts.
• Flagged separately: tax_credits includes a CTC child element for a family that is not eligible for CTC, and Housing Benefit and Council Tax Reduction count it as income; and SPC Regs Schedule IIB (the transitional amount for pensioners moved from CTC to Pension Credit, reg 6(6)(e), from 8 June 2024) is not modelled.

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