Round the High Income Child Benefit Charge as s. 681C(3) requires

changelog.d/2321.fixed.md

@@ -0,0 +1 @@
+- Round the High Income Child Benefit Charge as ITEPA 2003 s. 681C(3) requires: the percentage down to a whole number, and the Child Benefit and the charge down to whole pounds.

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

@@ -29,11 +29,15 @@ data in a release; updating model code alone does not repair existing data.
 
 `gov.hmrc.child_benefit.opt_out_charge_share` is a behavioural assumption, not
 a statutory eligibility rule. It defaults to one: a flagged family continues
-to opt out only while the charge would recover the full benefit. The charge
-share is calculated independently of payment and clipped to [0, 1]. A reform
-that reduces the share below the threshold, removes the charge or neutralises
-`CB_HITC` restores payment. A zero charge never sustains an opt-out, even if
-the assumed threshold is zero. Genuine nonclaimants remain outside payment.
+to opt out only while the continuous charge share is one, that is while the
+higher adjusted net income in the family is at or above the end of the
+phase-out band. The share is the unrounded fraction of the band crossed, calculated independently of
+payment and clipped to [0, 1]. A reform that reduces the share below the
+threshold, removes the charge or neutralises `CB_HITC` restores payment. A zero
+continuous charge share never sustains an opt-out, even if the assumed
+threshold is zero. The statutory charge (`CB_HITC`) is different: ITEPA 2003
+s. 681C(3) rounds its percentage and amount down, so it can be nil while the
+share is small but positive. Genuine nonclaimants remain outside payment.
 
 Microcosm selects fully charged families first and can draw from partly charged
 families if needed to meet its target. The model's default threshold is an

policyengine_uk/reforms/conservatives/household_based_hitc.py

@@ -1,4 +1,8 @@
 from policyengine_uk.model_api import *
+from policyengine_uk.utils.child_benefit import (
+    child_benefit_charge_percentage,
+    round_down_to_pounds,
+)
 
 
 class CB_HITC(Variable):
@@ -15,10 +19,12 @@ def formula(person, period, parameters):
         hitc = parameters(period).gov.hmrc.income_tax.charges.CB_HITC
         personal_income = person("adjusted_net_income", period)
         income = person.benunit.sum(personal_income)
-        percentage = max_(income - hitc.phase_out_start, 0) / (
-            hitc.phase_out_end - hitc.phase_out_start
+        # The same s. 681C(3) rounding as the baseline charge, on the
+        # household's combined income.
+        percentage = child_benefit_charge_percentage(
+            income, hitc.phase_out_start, hitc.phase_out_end
         )
-        return min_(percentage, 1) * CB_received
+        return round_down_to_pounds(percentage * round_down_to_pounds(CB_received))
 
 
 class make_cb_hitc_household_based(Variable):

policyengine_uk/tests/policy/baseline/finance/benefit/family/universal_credit/income/uc_earnings_deductions.yaml

@@ -272,10 +272,10 @@
       household:
         members: [parent, child]
   output:
-    # Child Benefit 27.05 x 52 = 1,406.60; the charge takes
-    # (70,000 - 60,000) / 200 = 50% of it, 703.30.
-    CB_HITC: [703.30, 0]
-    income_tax: [16_135.30, 0]
+    # Child Benefit 27.05 x 52 = 1,406.60, rounded down to £1,406; the charge
+    # takes (70,000 - 60,000) / 200 = 50% of it, £703 (s. 681C(3)).
+    CB_HITC: [703, 0]
+    income_tax: [16_135, 0]
     # 37,700 x 20% + (57,430 - 37,700) x 40%.
     uc_income_tax_on_earnings: [15_432, 0]
 

policyengine_uk/tests/policy/baseline/gov/hmrc/child_benefit/opt_out.yaml

@@ -87,7 +87,7 @@
   absolute_error_margin: 0.01
   input:
     people:
-      person1: {age: 40, adjusted_net_income: 100_000}
+      person1: {age: 40, adjusted_net_income: 200_000}
       person2: {age: 8}
       person3: {age: 5}
     benunits:
@@ -98,8 +98,9 @@
   output:
     child_benefit_entitlement: 2_337.40
     child_benefit: 2_337.40
-    # (100,000 - 60,000) / (10,000,000 - 60,000) * 2,337.40.
-    CB_HITC: [9.406036, 0, 0]
+    # (200,000 - 60,000) / (10,000,000 - 60,000) = 1.41%, rounded down to 1%
+    # (ITEPA 2003 s. 681C(3)); 1% of £2,337 is £23.37, rounded down to £23.
+    CB_HITC: [23, 0, 0]
 
 - name: Case 9, the configurable opt-out threshold includes its exact boundary.
   period: 2026
@@ -111,9 +112,10 @@
     gov.hmrc.child_benefit.opt_out_charge_share: 0.5
   output:
     child_benefit: [1_000, 0, 0]
-    CB_HITC: [499.95, 0, 0]
+    # 49.995% is rounded down to 49% (s. 681C(3)): £490.
+    CB_HITC: [490, 0, 0]
 
-- name: Case 10, a zero behavioural threshold still requires a positive charge.
+- name: Case 10, a zero behavioural threshold still requires a positive continuous charge share.
   period: 2026
   input:
     adjusted_net_income: [59_999, 60_000, 60_001]

policyengine_uk/tests/policy/baseline/gov/hmrc/income_tax/charges/child_benefit_hitc.yaml

@@ -47,6 +47,150 @@
       members: [person1, person2, person3, person4]
   output:
     child_benefit: 2_337.40
-    CB_HITC: [2_337.40, 0, 0, 0]
+    # s. 681C(3): the Child Benefit total is rounded down to £2,337.
+    CB_HITC: [2_337, 0, 0, 0]
     income_tax_pre_charges: [35_742, 4_486, 0, 0]
-    income_tax: [38_079.40, 4_486, 0, 0]
+    income_tax: [38_079, 4_486, 0, 0]
+
+# ITEPA 2003 s. 681C(3): the Child Benefit total and the charge are rounded
+# down to whole pounds, and the appropriate percentage ((ANI - £60,000) / £200
+# from 2024-25) to a whole number.
+- name: Case 6, the percentage, the Child Benefit and the charge are rounded down.
+  period: 2026
+  absolute_error_margin: 0
+  input:
+    people:
+      parent:
+        age: 40
+        employment_income: 71_336
+      child:
+        age: 5
+    benunit:
+      members: [parent, child]
+  output:
+    # (71,336 - 60,000) / 200 = 56.68, so 56%; £1,406.60 becomes £1,406;
+    # 56% of £1,406 is £787.36, so £787.
+    child_benefit: 1_406.60
+    CB_HITC: [787, 0]
+
+- name: Case 7, a whole-number percentage is not rounded below itself.
+  period: 2026
+  absolute_error_margin: 0
+  input:
+    people:
+      parent:
+        age: 40
+        employment_income: 70_000
+      child:
+        age: 5
+    benunit:
+      members: [parent, child]
+  output:
+    # (70,000 - 60,000) / 200 = 50%; 50% of £1,406 is £703.
+    CB_HITC: [703, 0]
+
+- name: Case 8, just under the next £200 step keeps the lower percentage.
+  period: 2026
+  absolute_error_margin: 0
+  input:
+    people:
+      parent:
+        age: 40
+        employment_income: 70_199
+      child:
+        age: 5
+    benunit:
+      members: [parent, child]
+  output:
+    # 50.995% rounds down to 50%: £703.
+    CB_HITC: [703, 0]
+
+- name: Case 9, at or above £80,000 the whole Child Benefit, in whole pounds.
+  period: 2026
+  absolute_error_margin: 0
+  input:
+    people:
+      parent:
+        age: 40
+        employment_income: 90_000
+      child1:
+        age: 5
+      child2:
+        age: 3
+    benunit:
+      members: [parent, child1, child2]
+  output:
+    child_benefit: 2_337.40
+    CB_HITC: [2_337, 0, 0]
+
+- name: Case 10, the 2023-24 rules, 1% per £100 above £50,000.
+  period: 2023
+  absolute_error_margin: 0
+  input:
+    people:
+      parent:
+        age: 40
+        employment_income: 55_550
+      child:
+        age: 5
+    benunit:
+      members: [parent, child]
+      child_benefit: 1_000
+  output:
+    # (55,550 - 50,000) / 100 = 55.5%, so 55%; 55% of £1,000 is £550.
+    CB_HITC: [550, 0]
+
+- name: Case 11, the Child Benefit total is rounded down before the percentage applies.
+  period: 2026
+  absolute_error_margin: 0
+  input:
+    people:
+      parent:
+        age: 40
+        employment_income: 79_800
+      child:
+        age: 5
+    benunit:
+      members: [parent, child]
+  output:
+    # (79,800 - 60,000) / 200 = 99%; 99% of £1,406 is £1,391.94, so £1,391.
+    # Rounding only the charge (99% of £1,406.60 = £1,392.53) would give £1,392.
+    CB_HITC: [1_391, 0]
+
+- name: Case 12, an income on an exact £200 step gets that many points.
+  period: 2026
+  absolute_error_margin: 0
+  input:
+    people:
+      parent:
+        age: 40
+        employment_income: 60_200
+      child:
+        age: 5
+    benunit:
+      members: [parent, child]
+  output:
+    # 1% of £1,406 is £14.06, so £14.
+    CB_HITC: [14, 0]
+
+- name: Case 13, four children's £4,199 is not rounded down to £4,198.
+  period: 2026
+  absolute_error_margin: 0
+  input:
+    people:
+      parent:
+        age: 40
+        employment_income: 90_000
+      child1:
+        age: 2
+      child2:
+        age: 4
+      child3:
+        age: 6
+      child4:
+        age: 8
+    benunit:
+      members: [parent, child1, child2, child3, child4]
+  output:
+    # 52 x (27.05 + 3 x 17.90) = 4,199.
+    CB_HITC: [4_199, 0, 0, 0, 0]