Retain property in UC capital alongside financial reports

changelog.d/2439.fixed.md

@@ -0,0 +1 @@
+- Fixed Universal Credit capital assessment so reported financial savings do not suppress countable property, with assessment-year sale-expense and secured-debt valuation and property allocation independent of financial reports. Retained the inherited residual financial convention, including subtraction of complete overrides from the financial pool, and company substitution after ordinary-source overrides, and documented the legacy pension-proxy limitation. Complete overrides consume their owners' disregarded company holdings once. Override floors and separate holding deductions share one household corporate-wealth budget proportionally, preventing inconsistent holdings from consuming ordinary savings. Bounded each holding before that budget to isolate negative and infinite inputs from other units' capital.

policyengine_uk/data/uprating_indices.yaml

@@ -106,8 +106,10 @@ gov.economic_assumptions.yoy_growth.obr.per_capita.gdp:
 - mortgage_capital_repayment
 - net_financial_wealth
 - non_residential_property_value
+- non_residential_property_secured_debt
 - other_investment_income
 - other_residential_property_value
+- other_residential_property_secured_debt
 # Purchase prices a dataset may impute; uprated like the property stocks.
 - additional_residential_property_purchased
 - non_residential_property_purchased
@@ -123,8 +125,8 @@ gov.economic_assumptions.yoy_growth.obr.per_capita.gdp:
 - savings
 - savings_interest_income
 - sublet_income
-# A formula of benunit_reported_capital; listed so a dataset that stores it
-# directly is uprated like the input.
+# An explicit complete UC override stored in a dataset is uprated like the
+# financial input; its default no longer derives from that input.
 - uc_reported_capital
 gov.economic_assumptions.yoy_growth.obr.per_capita.mixed_income:
 - self_employment_income

policyengine_uk/parameters/gov/dwp/universal_credit/means_test/capital/person_sources.yaml

@@ -8,7 +8,11 @@ description: >
   Lifetime ISA at its surrender value: regulation 49(1) values capital at its
   current market or surrender value, and ADM H1659 counts a Lifetime ISA at
   75% of its value under 60 and in full from 60. Lifetime ISAs exist from 6
-  April 2017, and the list is empty before then.
+  April 2017, and the list is empty before then. A nonnegative financial
+  observation (benunit_reported_capital) replaces these covered financial
+  sources to avoid counting a Lifetime ISA twice. A complete UC override
+  replaces them together with property and the household financial proxy,
+  before the existing regulation 77 company substitution.
 metadata:
   label: Universal Credit person-level capital sources
   period: year

policyengine_uk/parameters/gov/dwp/universal_credit/means_test/capital/property_sale_cost_rate.yaml

@@ -0,0 +1,14 @@
+description: >
+  Proportion deducted from current property market value where sale entails
+  expenses, before subtracting secured encumbrances (regulation 49). Broad
+  household property inputs are assumed to incur sale expenses. Cash financial
+  proxies do not receive this deduction.
+values:
+  2013-04-29: 0.1
+metadata:
+  label: Universal Credit property sale expense deduction
+  unit: /1
+  period: year
+  reference:
+    - title: The Universal Credit Regulations 2013 reg. 49(1)
+      href: https://www.legislation.gov.uk/uksi/2013/376/regulation/49/1

policyengine_uk/parameters/gov/dwp/universal_credit/means_test/capital/property_sources.yaml

@@ -0,0 +1,25 @@
+description: >
+  Household property amounts valued for Universal Credit in the assessment year
+  after sale expenses and property-specific secured debt, floored separately
+  at zero. The main home is excluded under Schedule 10 paragraph 1. The broad
+  other-property inputs are assumed to have sale expenses and no Schedule 10
+  disregard; reliable asset-level disregard and debt flags are unavailable,
+  so debt defaults to zero unless supplied explicitly. These approximations
+  do not imply all second homes are legally countable. Each net amount is
+  allocated across ALL claimant/partner adults in the household in proportion
+  to their number in each benefit unit, including units with financial reports,
+  complete overrides and no UC receipt. A complete override consumes its share.
+  This is an assumption about unobserved ownership, not a statutory rule.
+metadata:
+  label: Universal Credit countable property sources
+  period: year
+  unit: list
+  reference:
+    - title: The Universal Credit Regulations 2013 reg. 49(1)
+      href: https://www.legislation.gov.uk/uksi/2013/376/regulation/49/1
+    - title: The Universal Credit Regulations 2013 Schedule 10
+      href: https://www.legislation.gov.uk/uksi/2013/376/schedule/10
+values:
+  2013-04-29:
+    - uc_other_residential_property_capital
+    - uc_non_residential_property_capital

policyengine_uk/parameters/gov/dwp/universal_credit/means_test/capital/sources.yaml

@@ -1,49 +1,44 @@
 description: >
-  Model variables currently mapped to countable Universal Credit capital.
-  Regulation 46 takes the whole of a person's capital into account unless it is
-  treated as income or disregarded under regulation 48 and Schedule 10. The
-  current mappings are `savings` for liquid capital,
-  `other_residential_property_value` for residential property other than the
-  home, `non_residential_property_value` for other land and premises, and
-  `corporate_wealth` for shares and similar investment assets. `main_residence_value`
-  is excluded because Schedule 10 paragraph 1 disregards premises occupied as
-  the person's home. `private_pension_wealth` is excluded because Schedule 10
-  paragraph 10 disregards the value of any right to receive a pension under an
-  occupational or personal pension scheme (or any other scheme registered under
-  section 153 of the Finance Act 2004; paragraph 10 of Schedule 10 to the
-  Northern Ireland regulations makes the same disregard); pension income
-  actually drawn counts as unearned income instead. Other Schedule 10 disregards within these broad asset
-  classes are not yet split out separately. Where only household-level capital
-  is available for a multi-benunit household, the model uses a household-wide
-  adult-share proxy for residual capital because the dataset does not identify
-  which adults hold the beneficial interest in each capital asset. The
-  denominator is all unreported adults in the household, including adults in
-  benunits that are not themselves UC claimants. That proxy is a data
-  approximation, not a legislated allocation rule. Regulation 47 is cited only
-  as related context on jointly held capital. If some benunits provide
-  `uc_reported_capital` (by default the benefit unit's recorded capital,
-  `benunit_reported_capital`), the proxy is applied only to the residual
-  household capital for benunits that remain unreported.
+  Household financial proxies for Universal Credit: savings and corporate
+  financial wealth. A nonnegative benunit_reported_capital replaces these
+  financial proxies and covered person-level sources, including a Lifetime ISA.
+  Each benefit unit's complete uc_reported_capital override, otherwise its
+  observed financial total, reduces this financial pool. Subtracting complete
+  overrides retains the inherited allocation convention. An override precedes
+  regulation 77 company substitution and includes its claimant's and partner's
+  holdings: consume at least their disregarded holdings after applying one
+  household corporate_wealth budget without removing them again from the pool.
+  First clip each person's holding to [0, max(0, corporate_wealth)], with
+  positive infinity mapped to the upper bound and negative infinity to zero.
+  If total bounded holdings exceed nonnegative corporate_wealth, scale each
+  person's bounded holding proportionally before override floors and separate
+  pool deductions.
+  This is a defensive rule for inconsistent inputs, not a statutory determination;
+  regulation 77 substitution in the owner's own assessment is unchanged.
+  The residual is allocated by
+  claimant/partner counts to benefit units with neither a financial observation
+  nor a complete override,
+  including units that do not receive UC. This allocation is an assumption
+  about unobserved ownership, not a statutory rule. Countable property is
+  valued and shared independently through property_sources across ALL
+  claimant/partner adults, with complete-override units consuming their shares.
+  Main-home property and the named private_pension_wealth input are excluded
+  under Schedule 10 paragraphs 1 and 10. For missing-report households, the
+  legacy corporate_wealth proxy can still contain non-DB pension wealth that
+  is not separately identified and removed. Asset-specific Schedule 10 disregards
+  within these broad financial classes are not separately observed.
 metadata:
-  label: Universal Credit countable capital sources
+  label: Universal Credit financial capital proxy sources
   period: year
   unit: list
   reference:
     - title: The Universal Credit Regulations 2013 reg. 46(1)
       href: https://www.legislation.gov.uk/uksi/2013/376/regulation/46/1
-    - title: The Universal Credit Regulations 2013 reg. 47
-      href: https://www.legislation.gov.uk/uksi/2013/376/regulation/47
     - title: The Universal Credit Regulations 2013 reg. 48(1)
       href: https://www.legislation.gov.uk/uksi/2013/376/regulation/48/1
-    - title: The Universal Credit Regulations 2013 Schedule 10 para. 1
-      href: https://www.legislation.gov.uk/uksi/2013/376/schedule/10/paragraph/1
-    - title: The Universal Credit Regulations 2013 Schedule 10 para. 10
-      href: https://www.legislation.gov.uk/uksi/2013/376/schedule/10/paragraph/10
-    - title: The Universal Credit Regulations (Northern Ireland) 2016 Schedule 10 para. 10
-      href: https://www.legislation.gov.uk/nisr/2016/216/schedule/10/paragraph/10
+    - title: The Universal Credit Regulations 2013 Schedule 10
+      href: https://www.legislation.gov.uk/uksi/2013/376/schedule/10
 values:
   2013-04-29:
     - savings
-    - other_residential_property_value
-    - non_residential_property_value
     - corporate_wealth

policyengine_uk/tests/policy/baseline/finance/benefit/family/universal_credit/income/uc_income_from_capital.yaml

@@ -18,11 +18,9 @@
 # Every case below has income under the personal allowance, so no income tax
 # or National Insurance, and no housing, child or disability element.
 #
-# Property values are taken as UC capital as entered. Reg. 49(1) would first
-# deduct 10% for sale costs and any secured debt from a property's market
-# value; the model does not yet (#1960). So "£10,000 of let property" below
-# means £10,000 of assessable capital, for example a property with a market
-# value of £11,111.11 and no mortgage.
+# Reg. 49(1): property market value less 10% sale expenses and then secured
+# debt, floored at zero. The let-property cases assume sale expenses, no
+# secured debt and no Schedule 10 disregard, so £10,000 is assessed at £9,000.
 
 - name: Savings interest, dividends and rent below £6,000 of capital leave the award unchanged
   period: 2026
@@ -66,12 +64,13 @@
         savings: 0
         other_residential_property_value: 10_000
   output:
-    # Tariff income on £10,000 of capital: (10,000 - 6,000) / 250 = 16 steps
-    # x £4.35 = £69.60 a month, £835.20 a year. UC = 5,098.80 - 835.20 =
-    # £4,263.60.
-    uc_tariff_income: 835.20
-    uc_unearned_income: 835.20
-    universal_credit: 4_263.60
+    # £10,000 less 10% sale expenses = £9,000. Tariff: (9,000 - 6,000)
+    # / 250 = 12 steps x £4.35 = £52.20 a month, £626.40 a year.
+    # UC = 5,098.80 - 626.40 = £4,472.40.
+    uc_assessable_capital: 9_000
+    uc_tariff_income: 626.40
+    uc_unearned_income: 626.40
+    universal_credit: 4_472.40
 
 - name: Northern Ireland treats rent and interest from capital the same way
   period: 2026
@@ -92,10 +91,12 @@
         savings: 0
         other_residential_property_value: 10_000
   output:
-    # UC Regs (NI) 2016 regs. 66(1) and 72 match the GB text on these points.
-    uc_tariff_income: 835.20
-    uc_unearned_income: 835.20
-    universal_credit: 4_263.60
+    # UC Regs (NI) 2016 regs. 49, 66(1) and 72 match GB on these points:
+    # £9,000 capital after sale expenses, 12 steps, £626.40 annual tariff.
+    uc_assessable_capital: 9_000
+    uc_tariff_income: 626.40
+    uc_unearned_income: 626.40
+    universal_credit: 4_472.40
 
 - name: Rent from a lodger in the home does not reduce the award
   period: 2026

policyengine_uk/tests/policy/baseline/finance/benefit/family/universal_credit/income/uc_unearned_income.yaml

@@ -221,11 +221,12 @@
         savings: 0
         other_residential_property_value: 10_000
   output:
-    # Tariff income on £10,000 of capital in let property (taken as entered;
-    # reg. 49 valuation is #1960): (10,000 - 6,000) / 250 = 16 steps x £4.35
-    # x 12 = £835.20. Neither the rent nor the interest is added on top of it.
-    uc_tariff_income: 835.20
-    uc_unearned_income: 835.20
+    # Reg. 49: £10,000 property less 10% sale expenses, with no debt,
+    # is £9,000. Tariff: (9,000 - 6,000) / 250 = 12 steps x £4.35 x 12
+    # = £626.40. Neither the rent nor the interest is added on top of it.
+    uc_assessable_capital: 9_000
+    uc_tariff_income: 626.40
+    uc_unearned_income: 626.40
 
 - name: Reported capital drives tariff income for multi-benunit households
   period: 2025

policyengine_uk/tests/policy/baseline/finance/benefit/family/universal_credit/is_UC_eligible.yaml

@@ -151,7 +151,7 @@
     uc_assessable_capital: [20_000, 20_000]
     is_uc_eligible: [false, false]
 
-- name: Mixed reported and unreported benunits use residual household capital
+- name: Benefit units with and without financial observations use residual household capital
   period: 2025
   absolute_error_margin: 0
   input:
@@ -163,7 +163,7 @@
     benunits:
       benunit_1:
         members: person_1
-        uc_reported_capital: 12_000
+        benunit_reported_capital: 12_000
       benunit_2:
         members: person_2
     households:
@@ -259,7 +259,8 @@
         members: person
         other_residential_property_value: 50_000
   output:
-    uc_assessable_capital: 50_000
+    # Reg. 49: £50,000 market value less 10% sale expenses, with no debt.
+    uc_assessable_capital: 45_000
     is_uc_eligible: false
 
 - name: Countable non-residential property can push capital over the upper threshold
@@ -277,7 +278,8 @@
         members: person
         non_residential_property_value: 50_000
   output:
-    uc_assessable_capital: 50_000
+    # Reg. 49: £50,000 market value less 10% sale expenses, with no debt.
+    uc_assessable_capital: 45_000
     is_uc_eligible: false
 
 - name: Countable corporate wealth can push capital over the upper threshold

policyengine_uk/tests/policy/baseline/finance/benefit/family/universal_credit/test_uc_capital_allocation.py

@@ -1,4 +1,4 @@
-"""The household capital proxy conserves residual capital within each household."""
+"""The financial proxy conserves residual capital after financial observations."""
 
 import numpy as np
 import pytest
@@ -59,7 +59,9 @@ def household_capital_situations(draw):
                 unreported_indices.append(len(benunits))
             benunits[unit_id] = {
                 "members": members,
-                "uc_reported_capital": {2025: reported_capital if has_reported else -1},
+                "benunit_reported_capital": {
+                    2025: reported_capital if has_reported else -1
+                },
             }
             household_members.extend(members)
         households[f"household_{household_index}"] = {

policyengine_uk/tests/policy/baseline/finance/benefit/family/universal_credit/uc_assessable_capital.yaml

@@ -88,7 +88,7 @@
     # Previously [0, 36,000]; each now receives 36,000 * 1/2 = 18,000.
     uc_assessable_capital: [18_000, 18_000]
 
-- name: Reported capital leaves a residual split between unreported claimants.
+- name: Reported financial capital leaves a residual split between unreported claimants.
   period: 2025
   input:
     people:
@@ -112,7 +112,7 @@
     benunits:
       reported:
         members: [reported_parent, qualifying_young_person]
-        uc_reported_capital: 8_000
+        benunit_reported_capital: 8_000
       young:
         members: [young_claimant]
       couple:
@@ -122,7 +122,7 @@
         members: [reported_parent, qualifying_young_person, young_claimant, older_claimant, partner]
         savings: 32_000
   output:
-    household_uc_reported_capital: 8_000
+    household_uc_reported_financial_capital: 8_000
     household_uc_unreported_claimants: 3
     # 32,000 - 8,000 = 24,000 residual. Shares are 24,000 / 3 = 8,000
     # and 24,000 * 2/3 = 16,000. Previously [8,000, 0, 24,000].

policyengine_uk/tests/policy/baseline/gov/dwp/lifetime_isa_capital.yaml

@@ -212,6 +212,9 @@
         members: [parent_1, parent_2, adult_child]
         savings: 9_000
   output:
+    # The complete override replaces the child's LISA and consumes £2,000
+    # from the household financial pool under the inherited convention.
+    # The unreported parents receive the remaining £7,000 financial proxy.
     uc_assessable_capital: [7_000, 2_000]
 
 - name: An adult child's Lifetime ISA counts in the child's Housing Benefit benunit only