Merge pull request #907 from PolicyEngine/fix/include_other_credits

SPI model fixes
PolicyEngine · Jul 27, 2024 · 3a36c59 · 3a36c59
2 parents 88bde84 + ca5c835
commit 3a36c59
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diff --git a/.gitignore b/.gitignore
@@ -52,3 +52,5 @@ policyengine_uk/calibration/*.h5
 **/*.log
 **/ukmod.json
 *.ipynb
+
+!test9.ipynb
diff --git a/changelog_entry.yaml b/changelog_entry.yaml
@@ -0,0 +1,11 @@
+- bump: minor
+  changes:
+    added:
+    - Tax on excess pension contributions
+    fixed:
+    - Include Scottish income tax calculation within overall UK income tax calculation
+    - Apply allowances to all types of income
+    - Prevent negative income tax output
+    - Update Dividend Allowance values
+    - Correct Starter Rate for Savings taper structure
+    - Prevent calculation errors due to empty extra dividend bracket with conflicting rates
diff --git a/policyengine_uk/data/datasets/spi.py b/policyengine_uk/data/datasets/spi.py
@@ -49,20 +49,39 @@ def generate(self):
         )
         data["savings_interest_income"] = df.INCBBS
         data["property_income"] = df.INCPROP
-        data["employment_income"] = df.PAY
+        data["employment_income"] = df.PAY + df.EPB
         data["employment_expenses"] = df.EXPS
-        data["pension_income"] = df.PENSION
-        data["pension_contributions"] = df.PENSRLF - df.PSAV_XS
+        data["private_pension_income"] = df.PENSION
+        # The below underestimates those with high amounts of excess pension
+        # savings, as it does not include the Annual Allowance
+        data["private_pension_contributions"] = df.PSAV_XS
+        data["pension_contributions_relief"] = df.PENSRLF
         data["self_employment_income"] = df.PROFITS
-        # HMRC seems to assume the trading allowance is already deducted (per record inspection of SREF 15494988 in 2020-21)
+        # HMRC seems to assume the trading and property allowance are already deducted
+        # (per record inspection of SREF 15494988 in 2020-21)
         data["trading_allowance"] = np.zeros(len(df))
+        data["property_allowance"] = np.zeros(len(df))
+        data["savings_starter_rate_income"] = np.zeros(len(df))
         data["capital_allowances"] = df.CAPALL
         data["loss_relief"] = df.LOSSBF
         data["is_SP_age"] = df.SPA == 1
         data["state_pension"] = df.SRP
         data["other_tax_credits"] = df.TAX_CRED
-        data["miscellaneous_income"] = df.MOTHINC
+        data["miscellaneous_income"] = (
+            df.MOTHINC
+            + df.INCPBEN
+            + df.OSSBEN
+            + df.TAXTERM
+            + df.UBISJA
+            + df.OTHERINC
+        )
         data["gift_aid"] = df.GIFTAID + df.GIFTINV
+        data["other_investment_income"] = df.OTHERINV
+        data["covenanted_payments"] = df.COVNTS
+        data["other_deductions"] = df.MOTHDED + df.DEFICIEN
+        data["married_couples_allowance"] = df.MCAS
+        data["blind_persons_allowance"] = df.BPADUE
+        data["marriage_allowance"] = np.where(df.MAIND == 1, 1_250, 0)
 
         for field in data:
             data[field] = {self.time_period: data[field]}
@@ -71,7 +90,7 @@ def generate(self):
 
 
 class SPI_2020_21(SPI):
-    spi_data_file_path = "~/Downloads/UKDA-9121-tab/tab/put2021uk.tab"
+    spi_data_file_path = "~/Desktop/put2021uk.tab"
     file_path = STORAGE_FOLDER / "spi_2020_21.h5"
     label = "SPI 2020-21"
     name = "spi_2020_21"

diff --git a/policyengine_uk/parameters/gov/hmrc/income_tax/allowances/dividend_allowance.yaml b/policyengine_uk/parameters/gov/hmrc/income_tax/allowances/dividend_allowance.yaml
@@ -1,9 +1,14 @@
 description: Amount of dividend income untaxed per year
 values:
-  2015-06-05: 2_000
+  2016-04-06: 5_000
+  2018-04-06: 2_000
+  2023-04-06: 1_000
+  2024-04-06: 500
 metadata:
   name: dividend_allowance
   label: Dividend Allowance
   period: year
   unit: currency-GBP
-  reference: https://www.gov.uk/government/publications/rates-and-allowances-income-tax/income-tax-rates-and-allowances-current-and-past
+  reference: 
+  - title: Tax on dividends
+    href: https://www.gov.uk/tax-on-dividends 
diff --git a/policyengine_uk/parameters/gov/hmrc/income_tax/earned_taxable_income_exclusions.yaml b/policyengine_uk/parameters/gov/hmrc/income_tax/earned_taxable_income_exclusions.yaml
@@ -3,9 +3,8 @@ values:
   0000-01-01:
     - taxable_savings_interest_income
     - taxable_dividend_income
-    - allowances
+    - received_allowances_earned_income
     - marriage_allowance
-    - pension_contributions_relief
 
 metadata:
   unit: list

diff --git a/policyengine_uk/parameters/gov/hmrc/income_tax/income_tax_additions.yaml b/policyengine_uk/parameters/gov/hmrc/income_tax/income_tax_additions.yaml
@@ -0,0 +1,11 @@
+description: All variables that are added together to calculate total income tax
+metadata:
+  label: Additive components of total income tax
+  unit: list
+values:
+  0000-01-01:
+  - earned_income_tax
+  - savings_income_tax
+  - dividend_income_tax
+  - CB_HITC
+  - private_pension_contributions_tax
diff --git a/policyengine_uk/parameters/gov/hmrc/income_tax/income_tax_subtractions.yaml b/policyengine_uk/parameters/gov/hmrc/income_tax/income_tax_subtractions.yaml
@@ -0,0 +1,8 @@
+description: All variables that are subtracted from the base amount to calculate total income tax
+metadata:
+  label: Subtractive components of total income tax
+  unit: list
+values:
+  0000-01-01:
+  - capped_mcad
+  - other_tax_credits
diff --git a/policyengine_uk/parameters/gov/hmrc/income_tax/rates/dividends.yaml b/policyengine_uk/parameters/gov/hmrc/income_tax/rates/dividends.yaml
@@ -75,7 +75,8 @@ brackets:
         label: Extra dividend tax bracket rate
         unit: /1
       values:
-        2015-06-05: 0.3935
+        2015-06-01: 0.381
+        2022-06-05: 0.3935
     threshold:
       description: The lower threshold for the extra dividend bracket rate.
       metadata:

diff --git a/policyengine_uk/parameters/gov/hmrc/income_tax/rates/savings_starter_rate/phase_out.yaml b/policyengine_uk/parameters/gov/hmrc/income_tax/rates/savings_starter_rate/phase_out.yaml
@@ -0,0 +1,9 @@
+description: Starter Rate for Savings phase-out rate
+values:
+  2014-04-06: 1
+metadata:
+  unit: currency_GBP
+  description: Rate, above the max Personal Allowance, at which Starter Rate for Savings total amount phases out, for each additional pound of non-savings income
+  reference: 
+  - title: Tax on savings interest
+    href: https://www.gov.uk/apply-tax-free-interest-on-savings
diff --git a/policyengine_uk/parameters/gov/hmrc/income_tax/rates/scotland/post_starter_rate.yaml b/policyengine_uk/parameters/gov/hmrc/income_tax/rates/scotland/post_starter_rate.yaml
@@ -26,7 +26,11 @@ brackets:
     values:
       2018-06-01: 2_000
       2019-06-01: 2_049
-      2020-06-01: 2_085
+      2020-03-04: 
+        value: 2_085
+        reference:
+          - title: "Capture in full: Tax rates 2020/21; Spring Budget 2020"
+            href: https://taxscape.deloitte.com/taxtables/deloitte-uk-tax-rates-2020-21--updated.pdf
       2022-01-01: 
         value: 2_162
         reference:
@@ -53,7 +57,11 @@ brackets:
       unit: currency-GBP
     values:
       2018-06-01: 12_150
-      2020-06-01: 12_444
+      2020-03-04: 
+        value: 12_444
+        reference:
+          - title: "Capture in full: Tax rates 2020/21; Spring Budget 2020"
+            href: https://taxscape.deloitte.com/taxtables/deloitte-uk-tax-rates-2020-21--updated.pdf
       2021-06-01: 12_658
       2022-01-01: 
         value: 13_118
@@ -81,7 +89,11 @@ brackets:
     values:
       2018-06-01: 31_580
       2019-06-01: 30_930
-      2020-06-01: 30_930
+      2020-03-04: 
+        value: 30_930
+        reference:
+          - title: "Capture in full: Tax rates 2020/21; Spring Budget 2020"
+            href: https://taxscape.deloitte.com/taxtables/deloitte-uk-tax-rates-2020-21--updated.pdf
       2022-01-01: 
         value: 31_092
         reference:
@@ -99,6 +111,11 @@ brackets:
       unit: /1
     values:
       2018-06-01: 0.47
+      2020-03-04:
+        value: 0.46
+        reference:
+          - title: "Capture in full: Tax rates 2020/21; Spring Budget 2020"
+            href: https://taxscape.deloitte.com/taxtables/deloitte-uk-tax-rates-2020-21--updated.pdf
   threshold:
     description: The threshold at which an individual pays the Scottish additional
       rate

diff --git a/policyengine_uk/tests/policy/baseline/finance/benefit/family/universal_credit.yaml b/policyengine_uk/tests/policy/baseline/finance/benefit/family/universal_credit.yaml
@@ -6,7 +6,7 @@
       person:
         age: 30
         employment_income: 30_000
-        pension_contributions: 1_000
+        private_pension_contributions: 1_000
         weekly_hours: 20
     benunits:
       benunit:
@@ -30,7 +30,7 @@
       person:
         age: 30
         employment_income: 3_000
-        pension_contributions: 1_000
+        private_pension_contributions: 1_000
         weekly_hours: 20
     benunits:
       benunit:
@@ -85,7 +85,7 @@
         age: 20
         weekly_hours: 25
         employment_income: 12_000
-        pension_contributions: 57
+        private_pension_contributions: 57
         dla_m: 62.55 * 52
         uc_limited_capability_for_WRA: true
       person_2:

diff --git a/...cyengine_uk/tests/policy/baseline/finance/tax/income_tax/savings_starter_rate_income.yaml b/...cyengine_uk/tests/policy/baseline/finance/tax/income_tax/savings_starter_rate_income.yaml
@@ -0,0 +1,44 @@
+- name: Full savings starter rate allowance
+  period: 2024
+  input:
+    basic_rate_savings_income_pre_starter: 5_000
+    earned_taxable_income: 15_000
+    taxable_dividend_income: 0
+  output:
+    savings_starter_rate_income: 5_000
+
+- name: Partial savings starter rate allowance
+  period: 2024
+  input:
+    basic_rate_savings_income_pre_starter: 4_000
+    earned_taxable_income: 19_000
+    taxable_dividend_income: 0
+  output:
+    savings_starter_rate_income: 3_570
+
+- name: No savings starter rate allowance due to high non-savings income
+  period: 2024
+  input:
+    basic_rate_savings_income_pre_starter: 2_000
+    earned_taxable_income: 22_000
+    taxable_dividend_income: 1_000
+  output:
+    savings_starter_rate_income: 0
+
+- name: Savings income exceeds allowance
+  period: 2024
+  input:
+    basic_rate_savings_income_pre_starter: 10_000
+    earned_taxable_income: 16_000
+    taxable_dividend_income: 0
+  output:
+    savings_starter_rate_income: 5_000
+
+- name: Partial allowance with dividend income
+  period: 2024
+  input:
+    basic_rate_savings_income_pre_starter: 5_000
+    earned_taxable_income: 16_000
+    taxable_dividend_income: 2_000
+  output:
+    savings_starter_rate_income: 4_570
diff --git a/...engine_uk/tests/policy/baseline/gov/hmrc/income_tax/allowances/is_allowance_eligible.yaml b/...engine_uk/tests/policy/baseline/gov/hmrc/income_tax/allowances/is_allowance_eligible.yaml
@@ -61,7 +61,7 @@
   period: 2024
   input: {}
   output: 
-    dividend_allowance: 2000.0
+    dividend_allowance: 500.0
 
 - name: Allowances Applicable to Adjusted Net Income
   period: 2024

diff --git a/...licy/baseline/gov/hmrc/income_tax/allowances/received_allowances/received_allowances.yaml b/...licy/baseline/gov/hmrc/income_tax/allowances/received_allowances/received_allowances.yaml
@@ -0,0 +1,44 @@
+- name: Received allowances with low income
+  period: 2024
+  input:
+    received_allowances_earned_income: 8_000
+    received_allowances_savings_income: 1_000
+    received_allowances_dividend_income: 500
+  output:
+    received_allowances: 9_500
+
+- name: Received allowances with medium income
+  period: 2024
+  input:
+    received_allowances_earned_income: 25_000
+    received_allowances_savings_income: 3_000
+    received_allowances_dividend_income: 2_000
+  output:
+    received_allowances: 30_000
+
+- name: Received allowances with high income
+  period: 2024
+  input:
+    received_allowances_earned_income: 80_000
+    received_allowances_savings_income: 10_000
+    received_allowances_dividend_income: 5_000
+  output:
+    received_allowances: 95_000
+
+- name: Received allowances with uneven amounts
+  period: 2024
+  input:
+    received_allowances_earned_income: 42_567.50
+    received_allowances_savings_income: 3_789.25
+    received_allowances_dividend_income: 1_234.75
+  output:
+    received_allowances: 47_591.50
+
+- name: Received allowances with zero savings and dividend income
+  period: 2024
+  input:
+    received_allowances_earned_income: 50_000
+    received_allowances_savings_income: 0
+    received_allowances_dividend_income: 0
+  output:
+    received_allowances: 50_000
diff --git a/...v/hmrc/income_tax/allowances/received_allowances/received_allowances_dividend_income.yaml b/...v/hmrc/income_tax/allowances/received_allowances/received_allowances_dividend_income.yaml
@@ -0,0 +1,59 @@
+- name: Dividend income less than remaining allowance
+  period: 2024
+  input:
+    allowances: 12_570
+    received_allowances_earned_income: 8_000
+    received_allowances_savings_income: 2_000
+    taxable_dividend_income: 2_000
+  output:
+    received_allowances_dividend_income: 2_000
+
+- name: Dividend income equal to remaining allowance
+  period: 2024
+  input:
+    allowances: 12_570
+    received_allowances_earned_income: 10_000
+    received_allowances_savings_income: 570
+    taxable_dividend_income: 2_000
+  output:
+    received_allowances_dividend_income: 2_000
+
+- name: Dividend income greater than remaining allowance
+  period: 2024
+  input:
+    allowances: 12_570
+    received_allowances_earned_income: 11_000
+    received_allowances_savings_income: 1_000
+    taxable_dividend_income: 1_000
+  output:
+    received_allowances_dividend_income: 570
+
+- name: No remaining allowance
+  period: 2024
+  input:
+    allowances: 12_570
+    received_allowances_earned_income: 10_570
+    received_allowances_savings_income: 2_000
+    taxable_dividend_income: 1_000
+  output:
+    received_allowances_dividend_income: 0
+
+- name: Negative taxable dividend income
+  period: 2024
+  input:
+    allowances: 12_570
+    received_allowances_earned_income: 10_000
+    received_allowances_savings_income: 1_000
+    taxable_dividend_income: -500
+  output:
+    received_allowances_dividend_income: 0
+
+- name: Negative remaining allowance
+  period: 2024
+  input:
+    allowances: 12_570
+    received_allowances_earned_income: 11_000
+    received_allowances_savings_income: 2_000
+    taxable_dividend_income: 1_000
+  output:
+    received_allowances_dividend_income: 0