Charge BADR, residential property and carried interest gains at their own CGT schedules

changelog.d/1858.added.md

@@ -0,0 +1 @@
+- Add three person-level inputs, `capital_gains_badr`, `capital_gains_residential_property` and `capital_gains_carried_interest`, as components of `capital_gains`, and charge each at its own schedule in `capital_gains_tax`: new parameters `gov.hmrc.cgt.badr.rate` and `.lifetime_limit`, `gov.hmrc.cgt.residential_property.{basic,higher,additional}_rate` and `gov.hmrc.cgt.carried_interest.{basic,higher,additional}_rate`. The annual exempt amount goes to the highest-rate schedule first, relief gains take the unused basic rate band before other gains (TCGA 1992 s. 1I(4)-(6)), and the remaining band goes where it saves most. With the inputs absent or zero the liability is unchanged. A reform that changes only `gov.hmrc.cgt.{basic,higher,additional}_rate` no longer reaches residential property, carried interest or relief gains; to tax every gain at income tax rates, set the `residential_property` and `carried_interest` rates too and set `gov.hmrc.cgt.badr.lifetime_limit` to zero.

changelog.d/dataset-files-open-read-only.fixed.md

@@ -0,0 +1 @@
+- Open dataset H5 files read-only when loading. huggingface_hub 1.32.0 stores cached downloads as read-only blobs, and the default append mode refused them, so every dataset-backed simulation failed with a PermissionError.

docs/book/assumptions/growthfactors.md

@@ -57,7 +57,7 @@ We derive these rates from OBR GDP growth and ONS population projections.
 |-------------|------|------|------|------|------|------|------|------|
 | Growth rate | 9.2% | 5.0% | 3.8% | 2.8% | 2.8% | 3.1% | 3.3% | 3.3% |
 
-We use per capita GDP for these variables: `capital_gains`, `capital_gains_before_response`, `corporate_wealth`, `dividend_income`, `gross_financial_wealth`, `lump_sum_income`, `main_residence_value`, `maintenance_income`, `miscellaneous_income`, `mortgage_capital_repayment`, `net_financial_wealth`, `non_residential_property_value`, `other_investment_income`, `other_residential_property_value`, `owned_land`, `pension_income`, `private_pension_wealth`, `private_transfer_income`, `property_income`, `savings`, `savings_interest_income`, `sublet_income`
+We use per capita GDP for these variables: `capital_gains`, `capital_gains_badr`, `capital_gains_before_response`, `capital_gains_carried_interest`, `capital_gains_residential_property`, `corporate_wealth`, `dividend_income`, `gross_financial_wealth`, `lump_sum_income`, `main_residence_value`, `maintenance_income`, `miscellaneous_income`, `mortgage_capital_repayment`, `net_financial_wealth`, `non_residential_property_value`, `other_investment_income`, `other_residential_property_value`, `owned_land`, `pension_income`, `private_pension_wealth`, `private_transfer_income`, `property_income`, `savings`, `savings_interest_income`, `sublet_income`
 
 ## Council tax
 

docs/book/policy/model-baseline.md

@@ -26,11 +26,11 @@ The government announced further National Insurance cuts, reducing the [employee
 
 ### Capital gains tax changes (Autumn Budget 2024)
 
-The government increased capital gains tax rates from 10%/20% to [18% for basic rate taxpayers](https://github.com/PolicyEngine/policyengine-uk/blob/master/policyengine_uk/parameters/gov/hmrc/cgt/basic_rate.yaml#L4) and [24% for higher rate taxpayers](https://github.com/PolicyEngine/policyengine-uk/blob/master/policyengine_uk/parameters/gov/hmrc/cgt/higher_rate.yaml#L4) in fiscal year 2025-26.
+The government increased capital gains tax rates from 10%/20% to [18% for basic rate taxpayers](https://github.com/PolicyEngine/policyengine-uk/blob/master/policyengine_uk/parameters/gov/hmrc/cgt/basic_rate.yaml#L4) and [24% for higher rate taxpayers](https://github.com/PolicyEngine/policyengine-uk/blob/master/policyengine_uk/parameters/gov/hmrc/cgt/higher_rate.yaml#L4) for disposals from 30 October 2024 (Finance Act 2025 s. 7), part-way through 2024-25; the model day-weights that year between the two schedules and applies the new rates in full from 2025-26. Gains qualifying for Business Asset Disposal Relief or Investors' Relief (`capital_gains_badr`) are charged at a [separate rate](https://github.com/PolicyEngine/policyengine-uk/blob/master/policyengine_uk/parameters/gov/hmrc/cgt/badr/rate.yaml) that rises from 10% to 14% in fiscal year 2025-26 and 18% from 2026-27, up to a [£1 million lifetime limit](https://github.com/PolicyEngine/policyengine-uk/blob/master/policyengine_uk/parameters/gov/hmrc/cgt/badr/lifetime_limit.yaml). Carried interest (`capital_gains_carried_interest`) is charged at a [flat 32%](https://github.com/PolicyEngine/policyengine-uk/blob/master/policyengine_uk/parameters/gov/hmrc/cgt/carried_interest/higher_rate.yaml) from fiscal year 2025-26 (Finance Act 2025 s. 12); its move into income tax from 2026-27 is not modelled.
 
 ### Spring Budget 2024
 
-The government increased the [child benefit high income tax charge threshold from £50,000 to £60,000](https://github.com/PolicyEngine/policyengine-uk/blob/master/policyengine_uk/parameters/gov/hmrc/income_tax/charges/CB_HITC/phase_out_start.yaml#L4) in fiscal year 2024-25.
+The government increased the [child benefit high income tax charge threshold from £50,000 to £60,000](https://github.com/PolicyEngine/policyengine-uk/blob/master/policyengine_uk/parameters/gov/hmrc/income_tax/charges/CB_HITC/phase_out_start.yaml#L4) in fiscal year 2024-25. The [higher rate of capital gains tax on residential property](https://github.com/PolicyEngine/policyengine-uk/blob/master/policyengine_uk/parameters/gov/hmrc/cgt/residential_property/higher_rate.yaml) fell from 28% to 24% for disposals from 6 April 2024 (Finance (No. 2) Act 2024 s. 6); the basic rate stayed at 18%, and neither changed on 30 October 2024. These rates apply to the `capital_gains_residential_property` component of a person's gains.
 
 ### Autumn Statement 2023 (Employee NI cut)
 
@@ -97,7 +97,7 @@ The model baseline includes all reforms above, incorporating the current UK tax
 Key features:
 - **Income tax**: 20%/40%/45% rates with personal allowance of £12,570 and higher rate threshold of £50,270
 - **National Insurance**: 8% employee rate, 15% employer rate, 6% self-employed rate
-- **Capital gains tax**: 18%/24% rates with £3,000 annual exempt amount
+- **Capital gains tax**: 18%/24% main rates with £3,000 annual exempt amount; 14% on Business Asset Disposal Relief gains, 18%/24% on residential property gains and a flat 32% on carried interest
 - **Universal Credit**: 55% taper rate with rebalancing reforms active
 - **Benefits**: Standard uprating with targeted cost of living support for 2022
 

policyengine_uk/data/dataset_schema.py

@@ -51,7 +51,9 @@ def __init__(
         file_path = str(file_path) if file_path else None
         if file_path is not None:
             self.validate_file_path(file_path)
-            with pd.HDFStore(file_path) as f:
+            # Read-only: the file may be a cached download the cache manager
+            # has made unwritable, and the default append mode would refuse it.
+            with pd.HDFStore(file_path, mode="r") as f:
                 self._person = f["person"]
                 self._benunit = f["benunit"]
                 self._household = f["household"]
@@ -193,7 +195,7 @@ def __init__(
 
         if file_path is not None:
             UKMultiYearDataset.validate_file_path(file_path)
-            with pd.HDFStore(file_path) as f:
+            with pd.HDFStore(file_path, mode="r") as f:
                 self.datasets = {}
                 for year in f.keys():
                     if year.startswith("/person/"):

policyengine_uk/data/uprating_indices.yaml

@@ -58,6 +58,9 @@ gov.economic_assumptions.yoy_growth.obr.mortgage_interest:
 gov.economic_assumptions.yoy_growth.obr.per_capita.gdp:
 - capital_gains
 - capital_gains_before_response
+- capital_gains_badr
+- capital_gains_residential_property
+- capital_gains_carried_interest
 - corporate_wealth
 - dividend_income
 - gross_financial_wealth

policyengine_uk/parameters/gov/hmrc/cgt/README.md

@@ -1 +1,13 @@
 # Capital Gains Tax
+
+The main rates (`basic_rate`, `higher_rate`, `additional_rate`) apply to gains other than those below; their 2024-25
+values are day-weighted across the 30 October 2024 change. `annual_exempt_amount` is deducted once across all of a
+person's gains, in the order most beneficial to the taxpayer (TCGA 1992 s. 1K(5)).
+
+- `badr/`: rate and lifetime limit for gains qualifying for Business Asset Disposal Relief or Investors' Relief
+  (TCGA 1992 s. 169N). These gains use the unused basic rate band before any other gains (TCGA 1992 s. 1I(4)-(6)).
+- `residential_property/`: rates on UK residential property gains (TCGA 1992 ss. 1H-1I).
+- `carried_interest/`: rates on carried interest gains (TCGA 1992 s. 1H; a flat 32% from 6 April 2025).
+
+The `additional_rate` files in the two schedule folders equal the higher rate in law and exist only so reforms can
+mirror the income tax additional-rate band, as the main `additional_rate` does.

policyengine_uk/parameters/gov/hmrc/cgt/badr/lifetime_limit.yaml

@@ -0,0 +1,20 @@
+description: Lifetime limit on gains qualifying for Business Asset Disposal Relief. The model applies it to the year's qualifying gains as if none of the limit had been used in earlier years, and charges gains above it at the main rates. Investors' Relief kept a separate £10 million limit until 30 October 2024 (Finance Act 2025 s. 10); the merged capital_gains_badr input does not distinguish the two reliefs, so the BADR limit applies to both.
+values:
+  2015-01-01:
+    value: 10_000_000
+    reference:
+      - title: Taxation of Chargeable Gains Act 1992 s. 169N(4)
+        href: https://www.legislation.gov.uk/ukpga/1992/12/section/169N
+  2020-03-11:
+    value: 1_000_000
+    reference:
+      - title: Finance Act 2020 s. 23 and Sch. 3 paras 1-2
+        href: https://www.legislation.gov.uk/ukpga/2020/14/schedule/3
+metadata:
+  unit: currency-GBP
+  label: BADR lifetime limit
+  reference:
+    - title: Taxation of Chargeable Gains Act 1992 s. 169N(4)
+      href: https://www.legislation.gov.uk/ukpga/1992/12/section/169N
+    - title: Finance Act 2025 s. 10 (Investors' Relief limit)
+      href: https://www.legislation.gov.uk/ukpga/2025/8/section/10

policyengine_uk/parameters/gov/hmrc/cgt/badr/rate.yaml

@@ -0,0 +1,27 @@
+description: Capital gains tax rate on gains qualifying for Business Asset Disposal Relief or Investors' Relief, charged on qualifying gains up to the lifetime limit whatever the taxpayer's income tax band. The rate rose from 10% to 14% for disposals from 6 April 2025 and to 18% from 6 April 2026; it did not change on 30 October 2024, so the fiscal-year value is not blended.
+values:
+  2015-01-01:
+    value: 0.1
+    reference:
+      - title: Taxation of Chargeable Gains Act 1992 s. 169N(3)
+        href: https://www.legislation.gov.uk/ukpga/1992/12/section/169N
+      - title: GOV.UK | Capital Gains Tax rates and allowances
+        href: https://www.gov.uk/guidance/capital-gains-tax-rates-and-allowances
+  2025-04-06:
+    value: 0.14
+    reference:
+      - title: Finance Act 2025 s. 8(1)-(3)
+        href: https://www.legislation.gov.uk/ukpga/2025/8/section/8
+  2026-04-06:
+    value: 0.18
+    reference:
+      - title: Finance Act 2025 s. 8(4)-(6)
+        href: https://www.legislation.gov.uk/ukpga/2025/8/section/8
+metadata:
+  unit: /1
+  label: BADR rate
+  reference:
+    - title: Taxation of Chargeable Gains Act 1992 s. 169N(3)
+      href: https://www.legislation.gov.uk/ukpga/1992/12/section/169N
+    - title: Finance Act 2025 s. 8
+      href: https://www.legislation.gov.uk/ukpga/2025/8/section/8

policyengine_uk/parameters/gov/hmrc/cgt/carried_interest/additional_rate.yaml

@@ -0,0 +1,18 @@
+description: Capital gains tax rate on carried interest gains that the model places above the income tax higher rate limit. Capital gains tax has no separate additional rate, so this equals carried_interest.higher_rate at every date; the parameter exists so that a reform can mirror the income tax additional-rate band on carried interest in the same way gov.hmrc.cgt.additional_rate allows for other gains.
+values:
+  2015-01-01:
+    value: 0.28
+    reference:
+      - title: Finance Act 2016 s. 83
+        href: https://www.legislation.gov.uk/ukpga/2016/24/section/83
+  2025-04-06:
+    value: 0.32
+    reference:
+      - title: Finance Act 2025 s. 12
+        href: https://www.legislation.gov.uk/ukpga/2025/8/section/12
+metadata:
+  unit: /1
+  label: carried interest CGT additional rate
+  reference:
+    - title: Taxation of Chargeable Gains Act 1992 s. 1H(4B)
+      href: https://www.legislation.gov.uk/ukpga/1992/12/section/1H

policyengine_uk/parameters/gov/hmrc/cgt/carried_interest/basic_rate.yaml

@@ -0,0 +1,20 @@
+description: Capital gains tax rate on carried interest gains that fall within the taxpayer's unused basic rate band. Finance Act 2016 s. 83 kept carried interest at 18% when the main basic rate fell to 10%. Finance Act 2025 s. 12 charges all carried interest arising from 6 April 2025 at a flat 32% outside the basic rate band, so from that date this equals the higher rate. Carried interest moves into the income tax framework from 6 April 2026, which the model does not represent; the 32% rate stands in for it.
+values:
+  2015-01-01:
+    value: 0.18
+    reference:
+      - title: Finance Act 2016 s. 83
+        href: https://www.legislation.gov.uk/ukpga/2016/24/section/83
+  2025-04-06:
+    value: 0.32
+    reference:
+      - title: Finance Act 2025 s. 12
+        href: https://www.legislation.gov.uk/ukpga/2025/8/section/12
+metadata:
+  unit: /1
+  label: carried interest CGT basic rate
+  reference:
+    - title: Taxation of Chargeable Gains Act 1992 s. 1H
+      href: https://www.legislation.gov.uk/ukpga/1992/12/section/1H
+    - title: GOV.UK | Capital Gains Tax rates and allowances
+      href: https://www.gov.uk/guidance/capital-gains-tax-rates-and-allowances

policyengine_uk/parameters/gov/hmrc/cgt/carried_interest/higher_rate.yaml

@@ -0,0 +1,20 @@
+description: Capital gains tax rate on carried interest gains of higher or additional rate taxpayers, and on gains above the unused basic rate band. Finance Act 2016 s. 83 kept carried interest at 28% when the main higher rate fell to 20%, and the 30 October 2024 rise did not touch it. Finance Act 2025 s. 12 charges all carried interest arising from 6 April 2025 at a flat 32%. Carried interest moves into the income tax framework from 6 April 2026, which the model does not represent; the 32% rate stands in for it.
+values:
+  2015-01-01:
+    value: 0.28
+    reference:
+      - title: Finance Act 2016 s. 83
+        href: https://www.legislation.gov.uk/ukpga/2016/24/section/83
+  2025-04-06:
+    value: 0.32
+    reference:
+      - title: Finance Act 2025 s. 12
+        href: https://www.legislation.gov.uk/ukpga/2025/8/section/12
+metadata:
+  unit: /1
+  label: carried interest CGT higher rate
+  reference:
+    - title: Taxation of Chargeable Gains Act 1992 s. 1H(4B)
+      href: https://www.legislation.gov.uk/ukpga/1992/12/section/1H
+    - title: GOV.UK | Capital Gains Tax rates and allowances
+      href: https://www.gov.uk/guidance/capital-gains-tax-rates-and-allowances

policyengine_uk/parameters/gov/hmrc/cgt/residential_property/additional_rate.yaml

@@ -0,0 +1,18 @@
+description: Capital gains tax rate on UK residential property gains that the model places above the income tax higher rate limit. Capital gains tax has no separate additional rate, so this equals residential_property.higher_rate at every date; the parameter exists so that a reform can mirror the income tax additional-rate band on residential property gains in the same way gov.hmrc.cgt.additional_rate allows for other gains.
+values:
+  2015-01-01:
+    value: 0.28
+    reference:
+      - title: Finance Act 2016 s. 83
+        href: https://www.legislation.gov.uk/ukpga/2016/24/section/83
+  2024-04-06:
+    value: 0.24
+    reference:
+      - title: Finance (No. 2) Act 2024 s. 6
+        href: https://www.legislation.gov.uk/ukpga/2024/12/section/6
+metadata:
+  unit: /1
+  label: residential property CGT additional rate
+  reference:
+    - title: Taxation of Chargeable Gains Act 1992 s. 1I
+      href: https://www.legislation.gov.uk/ukpga/1992/12/section/1I

policyengine_uk/parameters/gov/hmrc/cgt/residential_property/basic_rate.yaml

@@ -0,0 +1,15 @@
+description: Capital gains tax rate on UK residential property gains that fall within the taxpayer's unused basic rate band. Finance Act 2016 s. 83 kept residential property at 18% when the main basic rate fell to 10%, and the 30 October 2024 main-rate rise did not touch it, so the fiscal-year value is not blended.
+values:
+  2015-01-01:
+    value: 0.18
+    reference:
+      - title: Finance Act 2016 s. 83
+        href: https://www.legislation.gov.uk/ukpga/2016/24/section/83
+metadata:
+  unit: /1
+  label: residential property CGT basic rate
+  reference:
+    - title: Taxation of Chargeable Gains Act 1992 s. 1H
+      href: https://www.legislation.gov.uk/ukpga/1992/12/section/1H
+    - title: GOV.UK | Capital Gains Tax rates and allowances
+      href: https://www.gov.uk/guidance/capital-gains-tax-rates-and-allowances

policyengine_uk/parameters/gov/hmrc/cgt/residential_property/higher_rate.yaml

@@ -0,0 +1,20 @@
+description: Capital gains tax rate on UK residential property gains of higher or additional rate taxpayers, and on gains above the unused basic rate band. Finance Act 2016 s. 83 kept residential property at 28% when the main higher rate fell to 20%; Finance (No. 2) Act 2024 s. 6 cut it to 24% for disposals from 6 April 2024. It did not change on 30 October 2024, so the fiscal-year value is not blended.
+values:
+  2015-01-01:
+    value: 0.28
+    reference:
+      - title: Finance Act 2016 s. 83
+        href: https://www.legislation.gov.uk/ukpga/2016/24/section/83
+  2024-04-06:
+    value: 0.24
+    reference:
+      - title: Finance (No. 2) Act 2024 s. 6
+        href: https://www.legislation.gov.uk/ukpga/2024/12/section/6
+metadata:
+  unit: /1
+  label: residential property CGT higher rate
+  reference:
+    - title: Taxation of Chargeable Gains Act 1992 s. 1I
+      href: https://www.legislation.gov.uk/ukpga/1992/12/section/1I
+    - title: GOV.UK | Capital Gains Tax rates and allowances
+      href: https://www.gov.uk/guidance/capital-gains-tax-rates-and-allowances