Exempt unit trusts and stocks and shares ISAs from the sale-expense deduction

[MaxGhenis]

Stacked on #1969 (sale-expense deduction) and includes #1974 (the itemised capital lists). Once both merge, this diff is just the sale-expense lists and tests.

What

#1969 deducts 10% for the expenses of sale from corporate_wealth as a whole. The guidance treats its parts differently:

Asset	Guidance	10%?
Quoted shares	ADM H1665; DMG 29671, 52671, 84763; HBGM W1.513	yes
Unit trusts	bid price, no costs of sale even through a broker: ADM H1673-H1674; DMG 29680-29681, 52680-52681, 84771-84772; HBGM W1.530-W1.531	no
ISAs	withdrawal value, no paragraph applies the 10%: ADM H1656-H1658; DMG 29662-29664, 52662, 84748-84750	no

All six sale_expenses.sources lists (UC, HB, IS, JSA, ESA, PC) therefore name directly_held_shares and unitemised_corporate_wealth in place of corporate_wealth. unitemised_corporate_wealth is #1974's residual: all of corporate_wealth on datasets that don't itemise it, so those datasets keep #1969's flat treatment exactly.

Approximation, stated in every list. The Wealth and Assets Survey asks about unit trusts and investment trusts in one question, so the whole unit_and_investment_trusts bucket counts at full value. Investment trusts are quoted shares and arguably take the 10%. They made up 8.2% of the pooled funds in stocks and shares ISAs at 5 April 2022 and 6.9% at 5 April 2025 (HMRC ISA Table 9.6).

On WAS round 8, directly held shares are 32.9% of the share-like wealth (£217bn of £659bn; PolicyEngine/policyengine-uk-data#501). The deduction therefore averages 3.3% of corporate_wealth on split data, against 10% under #1969.

Invariants (tests)

The #1969 property tests keep their own hard-coded legal asset set: land, property, directly held shares and unitemised corporate wealth; not cash, trusts or ISAs. They assert each programme's list against it, so a list that drops HB's property sources or adds trusts or ISAs fails. New properties:

• the residual is ≥ 0 and equals max(0, corporate_wealth − Σ components);
• with every component nil, each programme's capital is bit-for-bit Value means-tested capital less 10% sale expenses and secured debt (UC reg 49 and legacy equivalents) #1969's (differential against a reform restoring its lists);
• at a zero rate, a consistent split conserves capital;
• a consistent split less the unsplit household is rate × (trusts + ISA), within [0, rate × corporate_wealth];
• no double counting: capital ≤ other assets + max(corporate_wealth, Σ components);
• total_wealth, net_wealth and corporate_sector_wealth ignore the components.

The new YAML file capital_valuation_share_split.yaml has hand-computed cases for UC (unsplit, consistent split, components only, partial split, components above corporate_wealth) and one split case each for HB, IS, JSA, ESA and PC. For example, with savings £5,000 plus shares £4,000, trusts £3,000 and an ISA £5,000, UC capital is £5,000 + £3,600 + £3,000 + £5,000 = £16,600, over the limit. The same £12,000 unitemised gives £15,800.

#1974's itemising-invariance test no longer holds by design, so it is replaced by these properties.

Local results:

• property and Python tests: 24 passed, with the itemising-invariance test then removed;
• capital YAML (ESA, HB, IS, JSA, UC, gov/dwp, household/wealth): 833 passed;
• tests/code_health: 1,864 passed;
• ruff format --check: clean.

Impact

None on datasets that don't itemise corporate_wealth, which is every released uk-data build so far. On policyengine-uk-data#501's split build the deduction falls from 10% of corporate_wealth to 10% of the directly held shares. The data PR measures the effect once both land.

axiom: TheAxiomFoundation/rulespec-uk#395 queued (extended with the asset-type distinction: TheAxiomFoundation/rulespec-uk#395 (comment))

🤖 Generated with Claude Code

[vahid-ahmadi]

Thanks Max. Reviewed at head b1a66004.

The "+10.5k lines" is the main merge carried in through #1974. The real diff over #1969 + #1974 (merged at their heads) is 11 files, +710/−125:

• the six sale_expenses.sources lists;
• the new capital_valuation_share_split.yaml;
• the property tests;
• test_stock_capital_periods.py;
• a changelog fragment.

That's what I reviewed.

Guidance:

• ADM H1674 is explicit: unit trusts have "no costs of sale. This applies even if persons use an agent, such as a stockbroker."
• H1665 applies the 10% to quoted shares.
• H1656 values an ISA at "what people would get if they withdrew their investment".

The lists now apply the 10% to directly_held_shares and the unitemised residual only, which is right for shares and unit trusts. SPC Sch V and UC Sch 10 have no disregard that changes this.

Probes:

• savings £5,000, shares £4,000, trusts £3,000, ISA £5,000 (corporate_wealth £12,000) gives £16,600 for UC, HB and IS. The same holdings with only the components entered also give £16,600.
• An unsplit corporate_wealth of £12,000 still gives #1969's £15,800.
• Your monthly case (£12,300) matches.

Tests:

• At the head: the capital-valuation, share-component, wealth-component, stock-period and PC reported-capital property tests, 26 passed. DWP, family and household YAML, 1,064 passed.
• Merged into current main (the merge is clean): YAML, 1,389 passed. Properties: 19 passed and 2 failed. The two failures are the same stale applies() oracle as on #1969 (here at tests/test_capital_valuation_properties.py:240), not the new share-split properties. They'll clear when #1969's fix is carried through.
• There's no CI on this PR, because its base isn't main, so these local runs are the only test evidence so far.

Findings:

1. Should fix (merge order). Retarget to main as soon as #1969 merges, and get CI green on the retargeted head before merging. Until then, nothing hosted has run on these lists. This PR must land in the same window as #1969 and #1974 (see my notes there): with those two in and this one out, the 10% on shares disappears.

2. Should fix. parameters/gov/dwp/universal_credit/means_test/capital/sale_expenses/sources.yaml:20-22, and the same sentence in the other five lists. The ISA exemption is weaker than the unit-trust one:

   • H1674 says outright that unit trusts have no costs of sale. For ISAs, the guidance is silent and you're inferring from H1656 ("withdrawal value").
   • A stocks-and-shares ISA holding quoted shares has to sell them through the ISA manager. That is a broker sale under H1605, and reg 49(1)(a) applies wherever "there would be expenses attributable to sale".

   I'd keep ISAs exempt, since most ISA money is in funds, but describe it as a judgement, like the investment-trust one, rather than "no ISA paragraph applies the 10%". Give the directly-held-shares share of stocks-and-shares ISAs from HMRC Table 9.6 alongside it.

3. Nit. variables/input/directly_held_shares.py:9. Employee share options now take the 10% as "shares". An unexercised option isn't sold through a broker and is often not realisable at all. It's fine as an approximation, but say so in the list descriptions next to the investment-trust caveat.

4. Nit. tests/test_capital_share_components.py. You removed the itemising-invariance test on purpose. A one-line comment pointing to the replacement differential in test_capital_valuation_properties.py would stop someone restoring it.