Limit Housing Benefit childcare deductions to qualifying charges and earnings/tax-credit residuals #2228

Summary

Approved plan B4 introduces one pre-assessed annual GBP charge input per child, counts only legally included children with qualifying paid care, reuses corrected WTC caps from #1925, and limits the deduction to remaining earnings plus WTC/CTC payments. Five files, one input; no provider/work-status matrix or dataset changes. GB working-age childcare earnings residual and caps (Regulation 27(1)(c), (2), (3)); GB qualifying childcare charges (Regulation 28: provider, age, work, leave and incapacity conditions); GB pension-age childcare deduction (Regulation 30; qualifying charges in regulation 31); NI pension-age childcare deduction (Regulation 28; charges in regulation 29; working-age equivalents 405 regulations 25 and 26); DWP Housing Benefit guidance BW2 income (Paragraphs W2.178–W2.182: cap and residual offset against any WTC/CTC in payment)

Audited model surface

• Audited release: policyengine-uk 2.106.1
• Audit unit: variable:housing_benefit_applicable_income_childcare_element
• Last model modification: 2024-07-12
• Explicitly reviewed units:
  • variable:housing_benefit_applicable_income_childcare_element — last model modification: 2024-07-12
• Audit date: 2026-10-09
• Periods reviewed: Current and historical childcare deductions under the existing annual household convention
• Jurisdictions: Great Britain and Northern Ireland, working-age and pension-age regulations

Findings and implementation parts

1. Aggregate generic childcare expenditure and age-eligible child counts do not establish qualifying charges, and the deduction is not limited to earnings and tax-credit residuals.

Sources: GB working-age childcare earnings residual and caps (Regulation 27(1)(c), (2), (3)); GB qualifying childcare charges (Regulation 28: provider, age, work, leave and incapacity conditions); GB pension-age childcare deduction (Regulation 30; qualifying charges in regulation 31); NI pension-age childcare deduction (Regulation 28; charges in regulation 29; working-age equivalents 405 regulations 25 and 26); DWP Housing Benefit guidance BW2 income (Paragraphs W2.178–W2.182: cap and residual offset against any WTC/CTC in payment)

• Add housing_benefit_qualifying_childcare_charges (Person annual GBP) and housing_benefit_childcare_earnings_limit (derived BenUnit); replace the existing childcare consumer; add focused YAML tests and one changelog. Keep standard/permitted/accommodation/additional disregard interactions without a circular dependency. Add Housing Benefit special £20 earnings disregard #2225 then Add Housing Benefit permitted-work earnings disregard #2219 are dependencies; Set DWP benefit rates to the announced amounts, not CPI projections #1925 owns the fixed caps. GB working-age childcare earnings residual and caps (Regulation 27(1)(c), (2), (3)); GB qualifying childcare charges (Regulation 28: provider, age, work, leave and incapacity conditions); GB pension-age childcare deduction (Regulation 30; qualifying charges in regulation 31); NI pension-age childcare deduction (Regulation 28; charges in regulation 29; working-age equivalents 405 regulations 25 and 26); DWP Housing Benefit guidance BW2 income (Paragraphs W2.178–W2.182: cap and residual offset against any WTC/CTC in payment)
  • Add or update reference at policyengine_uk/variables/gov/dwp/housing_benefit/applicable_income/housing_benefit_applicable_income_childcare_element.py → reference, count of children with paid care, cap and earnings residual using GB working-age childcare earnings residual and caps (Regulation 27(1)(c), (2), (3)); GB qualifying childcare charges (Regulation 28: provider, age, work, leave and incapacity conditions); GB pension-age childcare deduction (Regulation 30; qualifying charges in regulation 31); NI pension-age childcare deduction (Regulation 28; charges in regulation 29; working-age equivalents 405 regulations 25 and 26); DWP Housing Benefit guidance BW2 income (Paragraphs W2.178–W2.182: cap and residual offset against any WTC/CTC in payment).

Uncertainties and exclusions

Provider, work/leave, age, incapacity and hospital continuation conditions are externally assessed in the one approved input. No verified dataset mapping. Missing/zero charges produce no childcare deduction, which may understate eligible awards; generic childcare_expenses are not automatically treated as legally qualifying. Annual household and earnings status remain constant; full historical cash-payment attribution is not added.