Universal Credit rises with SSP and SMP: tax on them is deducted but they aren't counted as earnings #2337

What happens

Universal Credit deducts income tax and NI that arise on statutory sick pay (SSP) and statutory maternity pay (SMP), but doesn't count SSP or SMP as earnings. So UC rises when SSP or SMP rises.

The CI workstream measured about £0.15 more UC per £1 of SSP or SMP on certified uk-data 1.58.0, at main 6d89338. The effect shows up in 14 SMP households and 22 SSP households.

Code

• policyengine_uk/variables/household/benefits/employment_benefits.py: adds = ["statutory_sick_pay", "statutory_maternity_pay"].
• policyengine_uk/variables/gov/hmrc/income_tax/bases/taxable_employment_income.py: returns employment_income + employment_benefits - deductions, so tax and NI fall on SSP and SMP.
• policyengine_uk/variables/gov/dwp/universal_credit/income/uc_individual_earned_income_before_mif.py: earnings_components = ["employment_income", "miscellaneous_income"], which leaves out SSP and SMP. The tax and NI deducted from earned income still include the tax on them.

Likely fix (confirm against the statute first)

UC Regulations 2013 reg 55 defines employed earnings. Check whether it includes SSP, SMP and the other statutory payments. If it does, count them in UC earned income. If it doesn't, deduct only the tax and NI attributable to the counted earnings.

Add a test with a household on SMP or SSP: UC must not rise as SMP or SSP rises, other things equal.

Found by the Autumn Budget 2026 CI work (aggregate-impact report, #2335).