Apply the pensioner Council Tax Reduction earnings disregards (England, Wales, Scotland)

[MaxGhenis]

Built on #1908 (Housing Benefit earnings disregards, merged 2026-10-03 as ae7d805), whose net earnings and work-condition variables it reuses. Retargeted to main after that merge.

Review

• Independent review (GPT-6.1 Sol, job 20261003-101509-pr2033-r1d): APPROVE of 0a8ab3e, with no blocker or major. It recomputed all 21 YAML expectations, re-ran 251 targeted tests with 0 failed, and reproduced the impact headlines.
• Its minors were wording and one test nit. All are addressed in c2d9a5c and in this description:
  • Scotland's para 10(3)(c) quotation;
  • "word for word";
  • the employee-earnings qualification;
  • the fuel-duty note;
  • counts and rounding;
  • a tighter zero assertion in the bounds property.

Problem

Pension-age Council Tax Reduction in England, Wales and Scotland disregards no earnings. council_tax_reduction_applicable_income takes all income less tax, National Insurance and half of pension contributions, and the only adjustments it applies are the Pension Credit passport and the savings-credit-only rule (#1909). The national pensioner rules disregard £5, £10 or £25 a week of earnings, plus £17.10 where a work condition is met. These are sums fixed in law, like the Housing Benefit ones #1908 freezes. A pensioner earning £1,000 a year who is on the CTR taper loses £52 a year of CTR (20% of £260).

2026, England, council tax £2,000	applicable income → CTR on main	this PR
Single aged 70, State Pension £15,000, earnings £1,000	£15,314.00 → £1,599.60	£15,054.00 → £1,651.60

This is a real run of both branches, and it is the end-to-end YAML case below.

Law

All texts were read from legislation.gov.uk CLML (/data.xml) on 2026-10-02, including point-in-time versions. They are saved with the research notes. Contains public sector information licensed under the Open Government Licence v3.0.

England: The Council Tax Reduction Schemes (Prescribed Requirements) (England) Regulations 2012 (SI 2012/2885), Schedule 4, "Sums disregarded from applicant's earnings". Applied by Sch 1 para 17(9): "The sums specified in Schedule 4 (sums disregarded from earnings) are to be disregarded in calculating— (a) an applicant's earnings".

• Para 1: "Where two or more of paragraphs 2 to 5 apply in any particular case the overall maximum sum which falls to be disregarded in that case under those paragraphs is restricted to— (a) £25 in the case of a lone parent; (b) £20 in any other case."
• Para 2: "In a case where an applicant is a lone parent, £25 of earnings."
• Para 8: "Except where the applicant or his partner qualifies for a £20 disregard under the preceding provisions of this Schedule— (a) £5 must be disregarded if an applicant who has no partner has earnings; (b) £10 must be disregarded if an applicant who has a partner has earnings."
• Para 10(1): "In a case where the applicant is a person who satisfies at least one of the conditions set out in sub-paragraph (2), and his net earnings equal or exceed the total of the amounts set out in sub-paragraph (3), the amount of his earnings that falls to be disregarded under this Schedule must be increased by £17.10."
• Para 10(2)(b): "(i) is, or any partner of his is, aged at least 25 and is engaged in remunerative work for on average not less than 30 hours per week; or (ii) if he is a member of a couple— (aa) at least one member of that couple is engaged in remunerative work for on average not less than 16 hours per week; and (bb) his family includes at least one child or young person; (iii) is a lone parent who is engaged in remunerative work for on average not less than 16 hours per week; or (iv) is, or if he has a partner, one of them is, engaged in remunerative work for on average not less than 16 hours per week and paragraph 5(1) above is satisfied in respect of that person."
• Para 10(3): "(a) any amount disregarded under this Schedule; (b) the amount of child care charges calculated as deductible under paragraph 24(1)(c) of Schedule 1 (calculation of income on a weekly basis); and (c) £17.10."
• Net earnings, Sch 1 para 19(2): "the gross earnings of the applicant from that employment over the assessment period, less— (a) any amount deducted from those earnings by way of— (i) income tax; (ii) primary Class 1 contributions under the SSCBA; (b) one-half of any sum paid by the applicant by way of a contribution towards an occupational pension scheme; (c) one-half of the amount calculated in accordance with sub-paragraph (4) in respect of any qualifying contribution payable by the applicant". This is the same deduction as Housing Benefit (SI 2006/214 reg 36(2)).

Wales: The Council Tax Reduction Schemes and Prescribed Requirements (Wales) Regulations 2013 (WSI 2013/3029), Schedule 3, "Sums disregarded from applicant's earnings: pensioners" (applied by Sch 1 para 11(9); net earnings Sch 1 para 13). The paragraphs are numbered as in England and use the same sums:

• para 2, "£25 of earnings";
• para 8(a) "£5 is to be disregarded if an applicant who has no partner has earnings" and (b) "£10 is to be disregarded if an applicant who has a partner has earnings";
• para 10(1), "increased by £17.10".
• One wording difference: para 10(2)(b)(ii)(bb) is "the applicant's applicable amount includes a family premium under paragraph 3 of Schedule 2". Sch 2 para 3 gives that premium "in respect of a family of which at least one member is a child or young person", so the condition is the same.
• The 2013-14 financial year was under the revoked WSI 2012/3144 Sch 3. The as-made text has the same sums; regulation 1(3) says those regulations "apply in relation to the financial year beginning on 1 April 2013".

Scotland: The Council Tax Reduction (State Pension Credit) (Scotland) Regulations 2012 (SSI 2012/319), Schedule 2, "Sums to be disregarded in the calculation of earnings" (applied by reg 31(8); net earnings reg 33). The sums are:

• para 2, "In a case where the applicant is a lone parent, £25";
• para 8(a) "£5 if an applicant who has no partner has earnings" and (b) "£10 if an applicant who has a partner has earnings";
• para 10(1), "increased by £37.10 until and including 4 April 2021, and after that by £17.10";
• para 10(3)(c), "£37.10 until and including 4 April 2021, and after that £17.10".

That text was substituted on 6 April 2020 by the Council Tax Reduction (Scotland) Amendment (No. 3) (Coronavirus) Regulations 2020 (SSI 2020/108) reg 3(a). Before then para 10 read £17.10. Point-in-time versions at 1 April 2013 and 1 April 2019 read "increased by £17.10".

Amounts over time.

• £5, £10 and £25 are the same in every point-in-time version of all three schedules.
• England and Wales read £17.10 at 1 June 2020 and 5 April 2021, as in every other version; neither had a coronavirus increase. SI 2020/371 reg 5, which raised Housing Benefit's sum to £37.10 for 2020-21, names only the two Housing Benefit instruments.
• None of the three schedules carries an up-rating annotation.

The lone-parent reading. Para 1 caps the total only where two or more of paras 2 to 5 apply, and para 8 is withheld only where a £20 disregard applies. Read literally, a pensioner lone parent could therefore add para 8's £5 to para 2's £25. Paras 1, 2 and 8 are worded as in the Housing Benefit pension-age schedule (SI 2006/214 Sch 4 paras 1, 2 and 7), and this PR follows the reading #1908 adopts for Housing Benefit: £25 in all. DWP's Housing Benefit guidance manual (BP2 para P2.159, citing HB(SPC) Sch 4 para 2) treats £25 as the maximum disregard for a lone parent.

Change

• Parameters (new). gov.local_authorities.{england,wales,scotland}.council_tax_reduction.pensioners.earnings_disregard, each with single (£5), couple (£10), lone_parent (£25) and additional (£17.10):
  • all dated from 1 April 2013, with no uprating;
  • Scotland's additional is £37.10 from 6 April 2020 and £17.10 again from 5 April 2021;
  • references to the paragraphs above.
• council_tax_reduction_pensioner_earnings_disregard (new, benefit unit, annual):
  • the nation's £25 / £10 / £5 × 52, capped at net earnings;
  • plus the additional amount × 52 where the work conditions hold and net earnings, compared in pence, are at least that amount plus the capped flat amount ("equal or exceed");
  • for a family that is one of the schemes' pensioners (council_tax_reduction_pensioner, now on main: the qualifying age for State Pension Credit and no income-related benefit or Universal Credit award; SI 2012/2885 reg 3, WSI 2013/3029 reg 3, SSI 2012/319 reg 12) in England, Wales or Scotland, and 0 otherwise.
  • It reuses housing_benefit_net_earnings and meets_housing_benefit_additional_earnings_disregard_conditions from Take Housing Benefit earnings disregards from net earnings only #1908.
    • The work conditions match: each para 10(2) against HB(SPC) Sch 4 para 9(2). Wales's family-premium wording is equivalent.
    • Employees' net earnings use the same deductions: SI 2012/2885 Sch 1 para 19, WSI 2013/3029 Sch 1 para 13 and SSI 2012/319 reg 33, against HB(SPC) reg 36(2).
    • For the self-employed, the notional tax can differ. SSI 2012/319 reg 37(1) taxes chargeable income at "the basic rate" less "only the personal relief … under sections 36 or 37 of the Income Tax Act 2007". HB(SPC) reg 40(1) allows the reliefs in ITA Chapters 2, 3 and 3A, and the Scottish basic rate for a Scottish taxpayer. The model applies its Housing Benefit approximation (a share of the person's actual income tax) to all of them.
• council_tax_reduction_applicable_income: the general-rules branch subtracts the disregard. The Guarantee Credit passport (income 0) and the savings-credit-only rule (the Secretary of State's assessment, which already applies Pension Credit's own earnings disregards) are unchanged. Local working-age schemes such as Oxford's read this variable but have no pension-age families, so they are unaffected.

Tests

• YAML (council_tax_reduction/council_tax_reduction_pensioner_earnings_disregard.yaml, 21 cases), each hand-computed in a comment. Everyone is aged 70 and below the personal allowance, so net earnings equal gross earnings unless stated.
  • No earnings → 0. £1,000 → £260. £3 a week → £156.
  • Couple → £520. Couple earning £3 and £4 a week → £364.
  • Lone parent working 10 hours → £1,300, not £1,560.
  • 30 hours → £1,149.20. 29 hours → £260.
  • The para 10(1) earnings test at exactly £1,149.20 → £1,149.20, and a penny short (£1,149.19) → £260.
  • Disabled, 20 hours → £1,149.20. This is labelled a known limitation: the law gives para 5(1)'s £20 in place of the £5, so £1,929.20.
  • Couple with one 30-hour worker → £1,409.20.
  • Wales and Scotland 2026 → £1,149.20.
  • Scotland 2020 → £2,189.20 (£5 + £37.10). Scotland 2021 → £1,149.20. England 2020 → £1,149.20.
  • Scottish working-age worker → 0. Northern Ireland → 0. A pension-age claimant whose partner is on income-related ESA is not a CTR pensioner → 0.
  • End-to-end: the table above, with income tax £686, net earnings £957.13, disregard £260, applicable income £15,054 and CTR £1,651.60.
• Property tests (test_council_tax_reduction_pensioner_earnings_disregard_properties.py; Hypothesis, derandomize=True, 5 examples of up to 30 families; single, couple, lone parent and couple with children; ages 18 to 90; hours including 15, 16, 29 and 30; earnings £0 to £60,000; disability; State Pension; all four UK nations). The invariants:
  1. 0 ≤ disregard ≤ min(net earnings, (£25 + £37.10) × 52). No earnings, no disregard. Zero for a family with no member over State Pension age, and in Northern Ireland.
  2. The statutory sums in every year. In each year 2015-2030 (the model simulates from 2015) and each nation, a pension-age family with enough earnings gets exactly its weekly sum × 52, plus £17.10 × 52 (£37.10 in Scotland in 2020) where a work condition holds. The parameters themselves hold £5, £10, £25 and £17.10 in every year 2013-2030, with Scotland's 2020 exception.
  3. Non-decreasing in employment income.
  4. The disregard never raises applicable income, lowers it by no more than gross earnings, and never lowers the award (against the same population with the disregard set to zero).
  5. Differential against Housing Benefit. For pension-age families without childcare charges, the CTR disregard equals the Housing Benefit disregard (Take Housing Benefit earnings disregards from net earnings only #1908) in every nation for 2019, 2020, 2021 and 2026. The exception is England and Wales in 2020, where the test pins each at its own statutory amount: HB £37.10 (SI 2020/371), CTR £17.10.
  6. The Housing Benefit disregard (Take Housing Benefit earnings disregards from net earnings only #1908) is the statutory sum in every year. In each year 2015-2030, at working and pension age, a family with enough earnings and no IS, income-based JSA or income-related ESA has exactly £5, £10 or £25 × 52 disregarded, plus £17.10 × 52 (£37.10 in 2020) where a work condition holds. This complements Take Housing Benefit earnings disregards from net earnings only #1908's parameter-level check with simulated values.
• Mutation check. Each of these mutations was applied to a scratch copy and run against the YAML. The unmutated control passes 20 of 20.
  • The YAML catches 10 of 10:
    • M1, CPI uprating on £5;
    • M2, no cap at net earnings;
    • M3, Scotland's 2020 £37.10 dropped;
    • M4, the pension-age gate dropped;
    • M5, the Great Britain gate dropped;
    • M6, the earnings test dropped;
    • M7, the disregard not subtracted from income;
    • M8, a lone parent's £25 + £5;
    • M9, > in place of "equal or exceed";
    • M10, Housing Benefit's 2020 £37.10 used for CTR.
• On Take Housing Benefit earnings disregards from net earnings only #1908's head (38a528c), the new variable does not exist and the end-to-end case gives £1,599.60.
• Disregard guarantee credit recipients' income and capital in pensioner council tax reduction #1909's property test updated. test_council_tax_reduction_pension_credit_properties.py checked general-rules CTR income against main's old definition, which had no earnings disregard, and failed on pension-age earners (a couple's £520). Its oracle now subtracts an independently computed disregard: the statutory sums written out in the test, capped at net earnings, with the "equal or exceed" test, for the schemes' pensioners. 8 passed.
• On c2d9a5c:
  • the CTR YAML directory: 93 passed, 0 failed;
  • this PR's property tests: 7 passed. The bounds property now asserts zero for every family that is not a scheme pensioner and for an unknown country.
• On 0a8ab3e, the previous head (c2d9a5c changed only comments, docstrings and that property test):
  • the CTR, HB and all DWP YAML directories: 436 passed, 0 failed;
  • the Pension Credit property test: 8 passed.
• The mutation check ran on the 20-case revision of the YAML, before the 21st case was added.

Dataset impact

Real Microsimulation runs on the Enhanced FRS 2024-25 with current weights. Aggregates only. The base is #1908 at 728fb30, which includes main bfc5fea; this branch is at 8f1883a. Both trees are clean.

The current head differs from 8f1883a only in tests, docstrings, a parameter comment and a main merge. That merge's only model changes are fuel-duty parameters (gov/hmrc/fuel_duty), and it lands on the base and the branch alike, so the differences below still apply.

	2025	2026	2027
Council Tax Reduction, base → branch	£2.2955bn → £2.2965bn	£2.3527bn → £2.3547bn	£2.4179bn → £2.4201bn
Change	+£0.94m	+£2.02m	+£2.15m
England / Wales / Scotland	+£0.78m / +£0.16m / £0	+£1.88m / +£0.14m / £0	+£1.99m / +£0.16m / £0
Benefit units gaining	21.6k	21.0k	22.9k
…of which newly entitled	12.05k	0.55k	0.85k
Losing	0	0	0
Mean gain	£43.46	£96.22	£94.09
HB, PC, UC	unchanged	unchanged	unchanged
AHC poverty (all, pensioners)	unchanged	unchanged	unchanged

• Household net income rises by the CTR change, to the £0.001m.
• Every gain is at most 20% of the disregard, the withdrawal rate. The largest gain minus 0.2 × the disregard is at most £0.0002, which is float rounding. The largest possible gain is 0.2 × (£25 + £17.10) × 52 = £437.84.
• For every CTR pensioner family under the general rules, applicable income falls by the disregard (to within a penny of float rounding), unless it was already floored at zero.
• Scotland moves by £0 in every year: no Scottish benefit unit's award changes. Its pension-age earners who already receive CTR are at or below their applicable amount, so they get the maximum reduction with or without the disregard. None of the others becomes entitled.
• Few records. In 2026 the gains come from 38 survey records, 2 of them newly entitled; in 2025, 42 records (2 new); in 2027, 46 (4 new). In 2025 the 2 newly entitled records carry 12.05k of the 21.6k weighted gainers. The totals are small and depend on a handful of records.
• Earlier runs on older stack heads gave +£1.89m and then +£1.95m in 2026.
  • Since then, main has moved (Replace generic child and adult flags with each programme's legal definitions #1896, council_tax_reduction_pensioner and others).
  • This PR now gates on the schemes' pensioner definition.
  • Take Housing Benefit earnings disregards from net earnings only #1908 changed its income tax share.
• Caveat: the weights were calibrated under the old code, so a data rebuild will move these numbers.

Not in this PR

• The £20 disregards (paras 3 to 5 in each schedule: part-time firefighters and similar, carers, disability) and the para 1 cap. These match Take Housing Benefit earnings disregards from net earnings only #1908's scope; Housing Benefit has the same gap, tracked from Take Housing Benefit earnings disregards from net earnings only #1908. Until both are added, a disabled or carer pensioner earner gets £5 or £10 in place of £20; the YAML pins one such case.
• Childcare charges. The earnings test leaves out para 10(3)(b)'s childcare charges. The model deducts no childcare from CTR income, so the test uses the charges it actually deducts, none. Pensioners with relevant childcare charges are rare.
• Exempt work (para 6) and payments of earnings in foreign currency (para 11).
• Working-age Scotland and Wales have their own schedules (SSI 2021/249 Sch 3; WSI 2013/3029 Sch 8), which Give Scotland and Wales working-age council tax reduction their own rules (UC routes, passport, child amounts) #1966 implements. This PR gives them nothing, so the two do not overlap: Give Scotland and Wales working-age council tax reduction their own rules (UC routes, passport, child amounts) #1966 routes devolved working-age families to its own income variable, and this disregard is zero for them.

Overlaps

• Take Housing Benefit earnings disregards from net earnings only #1908: merged; this PR was built on it.
• Count Carer Support Payment as Council Tax Reduction income #1992 edits council_tax_reduction_applicable_income.py. This PR changes only the general-rules line, its comment and the documentation, so any conflict is line-level.
• Assess each Council Tax Reduction claim under its own family's scheme and exemption #2015, when it composes a separate-applicant route, should align earnings, work conditions and family status with the CTR applicant, so that one family's disregard cannot go to another (a review note).
• Pensioner council tax reduction: applicable amount (post-April-2021 allowance, children, severe disability premium) and income (Child Benefit, tariff income) #1933 lists other pensioner CTR gaps (personal allowance cohort, children, Child Benefit, tariff income); this PR does not touch them.

Invariants

These are the five properties above. Intended violations: none, apart from the pinned 2020 HB/CTR difference in England and Wales, which is the law.

axiom: SI 2012/2885 Sch 4 paras 8, 10; WSI 2013/3029 Sch 3; SSI 2012/319 Sch 2 — TheAxiomFoundation/rulespec-uk#418 queued

🤖 Generated with Claude Code

[MaxGhenis]

Merging on gates (2026-10-03).

• Head: c2d9a5c.
• CI: 6/6 checks pass on that head (Test 25m57s); gh pr checks exits 0; MERGEABLE, clean.
• Independent reviews (GPT-6.1 Sol):
  • 20261003-101509-pr2033-r1d: APPROVE of 0a8ab3e, with no blocker or major. It recomputed all 21 YAML expectations, re-ran 251 targeted tests with 0 failed, and reproduced the impact headlines.
  • 20261003-143507-pr2033-delta: APPROVE of this head, with no findings. The delta is comments, docstrings and one tightened property test.
• Impact (real Enhanced FRS runs): Council Tax Reduction +£2.02m in 2026; 21.0k benefit units gain, none lose; 38 survey records.
• Why no separate approval: this applies the pensioner earnings disregards that SI 2012/2885 Sch 4, WSI 2013/3029 Sch 3 and SSI 2012/319 Sch 2 fix in law, so it merges on gates.
• One reading to note: a pensioner lone parent gets £25 in all, not £25 plus £5. This follows the reading Take Housing Benefit earnings disregards from net earnings only #1908 adopted for Housing Benefit from DWP's guidance.
• Follow-ups: Axiom parity is queued in Encode the pensioner CTR earnings disregards: SI 2012/2885 Sch 4 paras 8 and 10, WSI 2013/3029 Sch 3, SSI 2012/319 Sch 2 (PE parity: policyengine-uk#2033) TheAxiomFoundation/rulespec-uk#418. The £20 disregards and childcare charges remain known gaps.