Charge no Plan 5 student loan repayment before 6 April 2026

changelog.d/2863.fixed.md

@@ -0,0 +1 @@
+The student loan repayment formula now charges Plan 5 borrowers nothing before 6 April 2026, as SI 2009/470 reg. 15(2BA) requires.

docs/book/validation/student-loan-repayments.ipynb

@@ -20,7 +20,7 @@
     "- **Plan 1**: loans for courses begun on or before 31 August 2012 under England's and Wales's student support regulations ([SI 2009/470 reg. 3A](https://www.legislation.gov.uk/uksi/2009/470/regulation/3A)), and every Student Finance Northern Ireland loan ([GOV.UK](https://www.gov.uk/repaying-your-student-loan/which-repayment-plan-you-are-on)). 9% of income above £24,990.\n",
     "- **Plan 2**: Student Finance England loans for courses begun from 1 September 2012 to 31 July 2023, and Student Finance Wales loans for courses begun on or after 1 September 2012 ([GOV.UK](https://www.gov.uk/repaying-your-student-loan/which-repayment-plan-you-are-on)). 9% of income above £27,295.\n",
     "- **Plan 4**: loans under Scottish student loan regulations from 1998 onwards whose repayments the Scottish Ministers have HMRC collect ([SI 2009/470 reg. 3D](https://www.legislation.gov.uk/uksi/2009/470/regulation/3D)). GOV.UK puts every Student Awards Agency Scotland loan on Plan 4. 9% of income above £31,395.\n",
-    "- **Plan 5**: Student Finance England loans for courses begun on or after 1 August 2023 ([GOV.UK](https://www.gov.uk/repaying-your-student-loan/which-repayment-plan-you-are-on)). Its threshold is £25,000, but SI 2009/470 reg. 15(2BA), which [SI 2022/1335 reg. 15(9)](https://www.legislation.gov.uk/uksi/2022/1335/regulation/15/made) inserted, requires no repayment of a Plan 5 loan on or before 5 April 2026, so Plan 5 borrowers owe nothing in 2024-25 or 2025-26. The model doesn't yet apply reg. 15(2BA): it charges Plan 5 borrowers 9% of income above £25,000 in those years too.\n",
+    "- **Plan 5**: Student Finance England loans for courses begun on or after 1 August 2023 ([GOV.UK](https://www.gov.uk/repaying-your-student-loan/which-repayment-plan-you-are-on)). Its threshold is £25,000, but SI 2009/470 reg. 15(2BA), which [SI 2022/1335 reg. 15(9)](https://www.legislation.gov.uk/uksi/2022/1335/regulation/15/made) inserted, requires no repayment of a Plan 5 loan on or before 5 April 2026, so Plan 5 borrowers owe nothing in 2024-25 or 2025-26. From 2026-27 they repay 9% of income above that threshold.\n",
     "- **Postgraduate**: 6% of income above £21,000.\n",
     "\n",
     "The FRS captures reported student loan repayments, while PolicyEngine calculates repayments based on income and loan plan type."
@@ -146,17 +146,15 @@
    "source": [
     "## What can make the two measures differ\n",
     "\n",
-    "The code compares two variables. `student_loan_repayments` holds the repayments a dataset reports; where a dataset supplies none, its formula returns `student_loan_repayment`, and the two match exactly. `student_loan_repayment` applies the plan's rate to income above the plan's threshold, and caps the result at `student_loan_balance` where the balance is known. They can differ for these reasons:\n",
+    "The code compares two variables. `student_loan_repayments` holds the repayments a dataset reports; where a dataset supplies none, its formula returns `student_loan_repayment`, and the two match exactly. `student_loan_repayment` applies the plan's rate to income above the plan's threshold, charges a Plan 5 borrower nothing before 2026-27, and caps the result at `student_loan_balance` where the balance is known. They can differ for these reasons:\n",
     "\n",
     "1. **Annual income**: the model applies the threshold to a year's income (`student_loan_income`, net income less benefits in kind), not to each pay period, so it doesn't reflect how income varies within the year.\n",
     "\n",
     "2. **Voluntary repayments**: the formula holds no voluntary repayments, so it leaves out any that a reported figure includes.\n",
     "\n",
     "3. **One plan per person**: `student_loan_plan` gives each person one plan, so the model can't charge someone who holds loans on two plans for both.\n",
     "\n",
-    "4. **Missing plans**: a person with no plan (`NONE`) gets no modelled repayment, whatever they report. [#1764](https://github.com/PolicyEngine/policyengine-uk/issues/1764) reports a run on `enhanced_frs_2023_24.h5` with policyengine-uk 2.88.43 for 2026 in which 5,570 people had a reported repayment and none had a modelled one, because no person had a plan.\n",
-    "\n",
-    "5. **Plan 5 before April 2026**: the model charges Plan 5 borrowers repayments that the law doesn't require until 6 April 2026 (see the plan list above)."
+    "4. **Missing plans**: a person with no plan (`NONE`) gets no modelled repayment, whatever they report. [#1764](https://github.com/PolicyEngine/policyengine-uk/issues/1764) reports a run on `enhanced_frs_2023_24.h5` with policyengine-uk 2.88.43 for 2026 in which 5,570 people had a reported repayment and none had a modelled one, because no person had a plan."
    ]
   },
   {

policyengine_uk/parameters/gov/hmrc/student_loans/repayments_due/plan_5.yaml

@@ -0,0 +1,18 @@
+description: Plan 5 student loan borrowers owe repayments if this is true. A borrower need not repay any part of a Plan 5 loan on or before 5 April 2026, so from 6 April 2026 the student loan repayment formula charges Plan 5 borrowers.
+values:
+  2015-04-06: false
+  2026-04-06:
+    value: true
+    metadata:
+      reference:
+        - title: SI 2009/470 reg. 15(2BB) (omits paragraph (2BA) on 6 April 2026)
+          href: https://www.legislation.gov.uk/uksi/2009/470/regulation/15
+metadata:
+  unit: bool
+  period: year
+  label: Plan 5 student loan repayments due
+  reference:
+    - title: SI 2009/470 reg. 15(2BA) and (2BB), inserted by SI 2022/1335 reg. 15(9)
+      href: https://www.legislation.gov.uk/uksi/2009/470/regulation/15
+    - title: SI 2022/1335 reg. 15(9)
+      href: https://www.legislation.gov.uk/uksi/2022/1335/regulation/15/made

policyengine_uk/tests/policy/baseline/gov/hmrc/student_loans/plan_5_repayment_start.yaml

@@ -0,0 +1,70 @@
+# SI 2009/470 reg. 15(2BA), inserted by SI 2022/1335 reg. 15(9): "a borrower
+# is not required to repay any part of a plan 5 loan on or before 5th April
+# 2026". Reg. 15(2BB) omits (2BA) on 6 April 2026.
+#
+# The model reads year Y's parameters at 30 April of Y, so 2025 reads the law
+# for 2025-26 (no Plan 5 repayment due) and 2026 reads 2026-27 (due).
+# Repayment income here equals employment income: there is no other income,
+# deduction or benefit in kind.
+
+- name: A Plan 5 borrower on £40,000 owes nothing in 2024-25
+  period: 2024
+  input:
+    age: 25
+    employment_income: 40_000
+    student_loan_plan: PLAN_5
+  output:
+    # Reg. 15(2BA) applies, so nil.
+    student_loan_repayment: 0
+
+- name: A Plan 5 borrower on £40,000 owes nothing in 2025-26
+  period: 2025
+  input:
+    age: 25
+    employment_income: 40_000
+    student_loan_plan: PLAN_5
+  output:
+    # Reg. 15(2BA) applies, so nil.
+    student_loan_repayment: 0
+
+- name: A Plan 5 borrower on £40,000 repays 9% above £25,000 in 2026-27
+  period: 2026
+  input:
+    age: 25
+    employment_income: 40_000
+    student_loan_plan: PLAN_5
+  output:
+    # 0.09 x (40,000 - 25,000) = 0.09 x 15,000 = 1,350
+    student_loan_repayment: 1_350
+
+- name: A Plan 5 borrower on £200,000 owes nothing in 2025-26
+  period: 2025
+  input:
+    age: 25
+    employment_income: 200_000
+    student_loan_plan: PLAN_5
+  output:
+    # Reg. 15(2BA) applies however far income exceeds the £25,000 threshold.
+    student_loan_repayment: 0
+
+- name: A Plan 2 borrower on £60,000 repays 9% above £28,470 in 2025-26
+  period: 2025
+  input:
+    age: 25
+    employment_income: 60_000
+    student_loan_plan: PLAN_2
+  output:
+    # Plan 2 threshold from 6 April 2025: £28,470.
+    # 0.09 x (60,000 - 28,470) = 0.09 x 31,530 = 2,837.70
+    student_loan_repayment: 2_837.70
+
+- name: A postgraduate borrower on £40,000 repays 6% above £21,000 in 2025-26
+  period: 2025
+  input:
+    age: 25
+    employment_income: 40_000
+    student_loan_plan: POSTGRADUATE
+  output:
+    # Postgraduate threshold £21,000, rate 6%.
+    # 0.06 x (40,000 - 21,000) = 0.06 x 19,000 = 1,140
+    student_loan_repayment: 1_140

policyengine_uk/tests/test_plan_5_repayment_start_properties.py

@@ -0,0 +1,171 @@
+"""Plan 5 student loan repayments start on 6 April 2026.
+
+SI 2009/470 reg. 15(2BA), inserted by SI 2022/1335 reg. 15(9): "Despite
+paragraphs (2), (2A) and (2B), a borrower is not required to repay any part of
+a plan 5 loan on or before 5th April 2026." Reg. 15(2BB) omits (2BA) on 6 April
+2026. The model reads year Y's parameters at 30 April of Y, so the years 2015
+to 2025 carry no Plan 5 liability and 2026 onwards do.
+
+Each property draws borrowers on every plan, batched into one Simulation per
+example, and compares the model with ``reference_repayment``: the formula
+without a Plan 5 start date, which charges the plan's rate on repayment income
+above the plan's threshold, capped by a positive balance.
+
+Invariants:
+
+1. P1: a Plan 5 borrower repays nothing in each year from 2015 to 2025, for
+   any income and any balance.
+2. P2: from 2026, every borrower's repayment equals the reference.
+3. P3: a borrower on any plan other than Plan 5 repays the reference amount in
+   every year from 2015.
+4. P4: a repayment never falls below nil and never exceeds a positive balance.
+"""
+
+from unittest.mock import patch
+
+import numpy as np
+import pytest
+from hypothesis import HealthCheck, given, settings
+from hypothesis import strategies as st
+
+from policyengine_uk import Simulation
+from policyengine_uk.tax_benefit_system import system
+
+_PROPERTY_SYSTEM = system.clone()
+PROPERTY_SETTINGS = settings(
+    max_examples=25,
+    deadline=None,
+    derandomize=True,
+    suppress_health_check=[HealthCheck.too_slow, HealthCheck.data_too_large],
+)
+PLANS = ("NONE", "PLAN_1", "PLAN_2", "PLAN_4", "PLAN_5", "POSTGRADUATE")
+THRESHOLD_KEYS = {
+    "PLAN_1": "plan_1",
+    "PLAN_2": "plan_2",
+    "PLAN_4": "plan_4",
+    "PLAN_5": "plan_5",
+    "POSTGRADUATE": "postgraduate",
+}
+FIRST_YEAR = 2015
+PLAN_5_FIRST_YEAR = 2026
+LAST_YEAR = 2035
+
+borrowers = st.lists(
+    st.tuples(
+        st.sampled_from(PLANS),
+        st.integers(0, 300_000),
+        # Zero means no balance is known, so no cap applies.
+        st.one_of(st.just(0), st.integers(1, 100_000)),
+    ),
+    min_size=1,
+    max_size=8,
+)
+plan_5_borrowers = st.lists(
+    st.tuples(
+        st.just("PLAN_5"),
+        st.integers(0, 1_000_000),
+        st.one_of(st.just(0), st.integers(1, 200_000)),
+    ),
+    min_size=1,
+    max_size=8,
+)
+
+
+def simulate(people, year):
+    """One Simulation with each (plan, employment income, balance) its own
+    household."""
+    situation = {"people": {}, "benunits": {}, "households": {}}
+    for i, (plan, income, balance) in enumerate(people):
+        name = f"p{i}"
+        situation["people"][name] = {
+            "age": {year: 30},
+            "employment_income": {year: income},
+            "student_loan_plan": {year: plan},
+            "student_loan_balance": {year: balance},
+        }
+        situation["benunits"][f"b{i}"] = {"members": [name]}
+        situation["households"][f"h{i}"] = {"members": [name]}
+    with patch(
+        "policyengine_uk.simulation.CountryTaxBenefitSystem",
+        side_effect=_PROPERTY_SYSTEM.clone,
+    ):
+        return Simulation(situation=situation)
+
+
+def reference_repayment(sim, people, year):
+    """Repayments from the plan's rate and threshold alone, with no Plan 5
+    start date."""
+    p = sim.tax_benefit_system.parameters(str(year)).gov.hmrc.student_loans
+    net_income = sim.calculate("net_income", year)
+    benefits = np.minimum(
+        sim.calculate("taxable_employment_income", year),
+        sim.calculate("benefits_in_kind", year),
+    )
+    income = np.maximum(net_income - benefits, 0)
+    out = []
+    for (plan, _, balance), person_income in zip(people, income):
+        if plan == "NONE":
+            out.append(0.0)
+            continue
+        threshold = p.thresholds[THRESHOLD_KEYS[plan]]
+        rate = (
+            p.postgraduate_repayment_rate
+            if plan == "POSTGRADUATE"
+            else p.repayment_rate
+        )
+        repayment = rate * max(0.0, person_income - threshold)
+        out.append(min(repayment, balance) if balance > 0 else repayment)
+    return np.array(out)
+
+
+@pytest.fixture(scope="module", autouse=True)
+def _release_simulation():
+    yield
+    _PROPERTY_SYSTEM.simulation = None
+
+
+@PROPERTY_SETTINGS
+@given(
+    people=plan_5_borrowers,
+    year=st.integers(FIRST_YEAR, PLAN_5_FIRST_YEAR - 1),
+)
+def test_p1_plan_5_borrowers_repay_nothing_before_2026_27(people, year):
+    sim = simulate(people, year)
+    repayment = sim.calculate("student_loan_repayment", year)
+    assert np.all(repayment == 0)
+
+
+@PROPERTY_SETTINGS
+@given(people=borrowers, year=st.integers(PLAN_5_FIRST_YEAR, LAST_YEAR))
+def test_p2_every_plan_follows_threshold_and_rate_from_2026_27(people, year):
+    sim = simulate(people, year)
+    repayment = sim.calculate("student_loan_repayment", year)
+    np.testing.assert_allclose(
+        repayment, reference_repayment(sim, people, year), rtol=1e-6, atol=0.01
+    )
+
+
+@PROPERTY_SETTINGS
+@given(
+    people=borrowers.map(
+        lambda people: [person for person in people if person[0] != "PLAN_5"]
+    ).filter(bool),
+    year=st.integers(FIRST_YEAR, LAST_YEAR),
+)
+def test_p3_other_plans_unchanged_in_every_year(people, year):
+    sim = simulate(people, year)
+    repayment = sim.calculate("student_loan_repayment", year)
+    np.testing.assert_allclose(
+        repayment, reference_repayment(sim, people, year), rtol=1e-6, atol=0.01
+    )
+
+
+@PROPERTY_SETTINGS
+@given(people=borrowers, year=st.integers(FIRST_YEAR, LAST_YEAR))
+def test_p4_repayment_is_bounded_by_nil_and_balance(people, year):
+    sim = simulate(people, year)
+    repayment = sim.calculate("student_loan_repayment", year)
+    balance = np.array([person[2] for person in people], dtype=float)
+    assert np.all(repayment >= 0)
+    capped = balance > 0
+    assert np.all(repayment[capped] <= balance[capped] + 1e-6)

policyengine_uk/variables/gov/hmrc/student_loans/student_loan_repayment.py

@@ -13,7 +13,9 @@ class student_loan_repayment(Variable):
         "Annual student loan repayment calculated from income and plan type. "
         "Repayments are 9% of income above threshold for Plans 1/2/4/5, "
         "and 6% for Postgraduate loans, capped by the outstanding balance "
-        "when that balance is available."
+        "when that balance is available. Plan 5 borrowers repay nothing "
+        "before 6 April 2026 (SI 2009/470 reg. 15(2BA) and (2BB)), so the "
+        "formula charges them nil for 2025-26 and earlier years."
     )
     definition_period = YEAR
     unit = GBP
@@ -46,6 +48,10 @@ def formula(person, period, parameters):
 
         rate = person("student_loan_repayment_rate", period)
         uncapped_repayment = rate * max_(0, income - threshold)
+        # SI 2009/470 reg. 15(2BA) and (2BB): no Plan 5 repayment is due on or
+        # before 5 April 2026.
+        repayment_due = (plan != StudentLoanPlan.PLAN_5) | p.repayments_due.plan_5
+        uncapped_repayment = where(repayment_due, uncapped_repayment, 0)
         return where(balance > 0, min_(uncapped_repayment, balance), uncapped_repayment)