Model the company car and car fuel benefits, with Class 1A NICs

.github/workflows/test-suite.yaml

@@ -84,9 +84,13 @@ jobs:
     # (two more were cancelled by newer pushes). In merge-queue run
     # 40541059060 the cancelled job failed Result once the shards had
     # finished, which took that pull request out of the queue. 45 minutes
-    # leaves room for a slow runner and still stops a hung job; Result
-    # waits about an hour for the shards anyway.
-    timeout-minutes: 45
+    # was then not enough either: on 29 October jobs were cancelled at it
+    # after every test had passed, with the process still alive 11 and 18
+    # minutes after pytest's summary (runs 40895005971 and 40917254004).
+    # The runner most likely runs short of memory, because every case's
+    # simulation is kept to the end (#2741). 75 minutes matches the Python
+    # shards, which Result waits for anyway, until the cases are released.
+    timeout-minutes: 75
     steps:
       - name: Checkout repo
         uses: actions/checkout@v6

changelog.d/2749.added.md

@@ -0,0 +1 @@
+Added the company car and car fuel benefits in kind from 2020-21 (ITEPA 2003 ss. 120 to 152), with the s. 139 appropriate percentages to 2029-30, person inputs for the company car, and Class 1A NICs on both benefits in `ni_employer` and `total_national_insurance`; the benefits are taxed through `taxable_employment_income` and kept out of Class 1 earnings, means-tested earnings and student loan repayment income, and the `company_car_tax_rise_2030` scenario applies Budget 2026's one-point rise for 2030-31.

docs/book/assumptions/employer-ni-incidence.md

@@ -62,6 +62,19 @@ The response amounts enter `household_tax`; those same variables are not added t
 and [capital](https://github.com/PolicyEngine/policyengine-uk/blob/b4dbaf57a4ebb1d1f0ba5f7a384795422828db75/policyengine_uk/variables/contrib/policyengine/employer_ni/employer_ni_response_capital_incidence.py)
 allocation formulas.
 
+## Secondary Class 1 only
+
+All three channels cover secondary Class 1 contributions. `ni_employer` also
+holds Class 1A contributions on benefits in kind (`ni_class_1a`), but
+`employer_cost`, `baseline_employer_cost` and `adjusted_employer_cost` leave
+them out, as they leave out the benefits themselves. No household bears
+Class 1A or a change in it, whether the change comes from the benefits (as
+with a rise in the company car appropriate percentages) or from the employer
+rate, which Class 1A follows (SSCBA 1992 s. 10(5)). Such a reform raises
+`gov_tax` by its Class 1A change on top of what households pay. Passing
+Class 1A through these channels is
+[#2752](https://github.com/PolicyEngine/policyengine-uk/issues/2752).
+
 ## Measures and aggregation
 
 Report these quantities separately:

docs/book/programs/gov/hmrc/company-car-benefit.md

@@ -0,0 +1,149 @@
+# Company car and car fuel benefits
+
+A car an employer makes available for an employee's private use is a
+benefit in kind: its cash equivalent is taxed as employment income
+([ITEPA 2003 s. 120][s120]), and so is fuel provided for its private use
+([s. 149][s149]). The employer pays Class 1A National Insurance on both
+([SSCBA 1992 s. 10][sscba10]). The model calculates both benefits from
+2020-21.
+
+## Inputs
+
+Each person can have one company car. The inputs default to no car, so a
+simulation that sets none of them is unchanged.
+
+| Input | Meaning |
+| --- | --- |
+| `company_car_list_price` | List price of the car and its accessories; zero means no company car |
+| `company_car_capital_contributions` | Capital sums the employee has contributed, this year and earlier |
+| `company_car_co2_emissions` | CO2 emissions figure in g/km (0 for a car that cannot emit CO2) |
+| `company_car_electric_range` | Electric range figure in miles |
+| `company_car_fuel_type` | Fuel type (the `CarFuelType` enum also used for vehicle excise duty) |
+| `company_car_registered_from_6_april_2020` | First registered on or after 6 April 2020 (matters in 2020-21 and 2021-22 only) |
+| `company_car_availability` | Share of the tax year the car is available (default 1) |
+| `company_car_private_use_payments` | Payments for private use |
+| `company_car_private_fuel_provided` | Fuel provided for private use and not made good in full |
+
+The `car_*` inputs describe the person's own car for vehicle excise duty
+and play no part here.
+
+Data that fills these inputs needs to know three things:
+
+- **Set the CO2 figure with the list price.** The model cannot tell a
+  missing figure from 0 g/km, so a car with a list price and no CO2 figure is
+  taxed at the zero-emission rate. A car of the `ELECTRIC` fuel type is taken
+  to emit 0 g/km whatever figure is entered.
+- **Keep the benefits out of pay.** `employment_income` must not also hold
+  them, or they are taxed twice and wrongly bear employee NICs. The SPI's
+  EPB (expenses payments and benefits in kind) includes them, so a dataset
+  that adds EPB to pay, as policyengine-uk-data's SPI records do, must take
+  the car and car fuel benefits out of it.
+- **Projected years.** The list price, capital contributions and payments
+  for private use grow with CPI when a dataset is projected to later years.
+  CPI stands in for a new-car price index, which the OBR does not forecast.
+
+## Calculation
+
+`company_car_appropriate_percentage` applies [s. 139][s139]: a rate for
+0 g/km, rates for 1 to 50 g/km by electric range (one rate from 2028-29),
+a rate for each band from 51-54 to 70-74 g/km (65-74 g/km from 2028-29),
+and from 75 g/km a base rate plus one point for each full 5 g/km, up to the
+maximum. A diesel car not meeting the Euro 6d (RDE2) standard adds 4 points,
+within the maximum ([s. 141][s141]); a car that cannot emit CO2 takes no
+supplement. In 2020-21 and 2021-22 a car first registered on or after
+6 April 2020 takes the lower rates of s. 139A (Finance Act 2020 ss. 9 and
+10). The appropriate percentage is zero for a person without a company car
+(`has_company_car`).
+
+`company_car_benefit` follows the steps of [s. 121][s121]: the price, less
+capital contributions up to £5,000, times the appropriate percentage,
+reduced in proportion to the days the car is unavailable, less payments for
+private use, and never below zero. `car_fuel_benefit` is the appropriate
+percentage of the car fuel benefit charge multiplier ([s. 150][s150]),
+reduced in proportion to the days the car is unavailable. It is nil for a
+car that cannot emit CO2. `benefits_in_kind` adds the two.
+
+## Where the benefits go
+
+- **Income tax.** `taxable_employment_income` adds `benefits_in_kind`, so the
+  benefits reach income tax, at Scottish rates for a Scottish taxpayer, and
+  adjusted net income: the personal allowance taper, the High Income Child
+  Benefit Charge, and the £100,000 limits of Tax-Free Childcare and the
+  extended childcare entitlement. They count as relevant UK earnings for the
+  limit on pension tax relief (HMRC PTM044100).
+- **Not student loan income.** Student loan repayments and the Plan 2
+  interest rate leave the benefits out: Self Assessment excludes Chapter 6
+  car benefits ([SI 2009/470 reg. 29(4)(e)][sl29]), and PAYE deducts
+  repayments from Class 1 earnings (reg. 41).
+- **Not earnings for Class 1 or the means tests.** The benefits are not in
+  `employment_income` or `employment_benefits`, so employee Class 1 NICs and
+  the earnings of Universal Credit ([UC Regulations 2013 reg. 55(2)(a)][uc55]),
+  Housing Benefit (HB Regulations 2006 reg. 35(2)(a)) and Council Tax
+  Reduction leave them out. Those tests still deduct the income tax on them,
+  which is tax paid in respect of the employment (reg. 55(5)(b)) and which
+  PAYE collects from pay. Universal Credit takes earnings as the lowest slice
+  of income, so it deducts all of that tax. Housing Benefit and Council Tax
+  Reduction deduct earnings' share of the person's tax, and count the
+  benefits with pay in that share; with other income, part of the tax on the
+  benefits falls on the other income, as part of the tax on pay does. The
+  Childcare Offer for Wales's gross income lists its sources one by one, and
+  benefits in kind are not among them.
+- **Employer National Insurance.** `ni_class_1a` is the Class 1A percentage
+  of `benefits_in_kind`, and `ni_employer` adds it to secondary Class 1, so it
+  reaches `gov_tax`. The Class 1A percentage is the secondary percentage for
+  the year, except 14.53% in 2022-23.
+- **No household bears Class 1A.** `employer_cost`, and the employer NI
+  incidence variables that recompute it, cover pay and secondary Class 1
+  only. So the fixed-cost pay response and the capital and consumer
+  channels leave out Class 1A and any change in it: it stays with employers
+  as revenue. A reform that changes Class 1A, such as the 2030-31 rise below
+  or a rise in the employer rate, raises `gov_tax` by more than it lowers
+  household incomes. Passing Class 1A through like secondary Class 1 is
+  [#2752](https://github.com/PolicyEngine/policyengine-uk/issues/2752).
+
+## 2030-31
+
+Finance Act 2025 s. 6 sets the rates for 2029-30 and subsequent tax years,
+so the baseline keeps them for 2030-31: 9% for 0 g/km, 19% for 1 to 50 g/km
+and a 39% maximum. Budget 2026 raises every rate for 2030-31 by one point, to
+a maximum of 40%, to be legislated in Finance Bill 2026-27. The
+`company_car_tax_rise_2030` scenario applies that rise:
+
+```python
+from policyengine_uk import Simulation
+from policyengine_uk.scenarios import company_car_tax_rise_2030
+
+reformed = Simulation(situation=situation, scenario=company_car_tax_rise_2030)
+```
+
+`policyengine_uk.scenarios.company_car_tax_rise_2030.COMPANY_CAR_TAX_RISE_2030`
+holds the same changes as a parameter-changes dictionary.
+
+The car fuel benefit charge multiplier is in the baseline for 2027-28 at the
+£30,200 Budget 2026 announced, before the Treasury order is made. That is the
+annual CPI uprating, which the Budget does not score, so a pre-Budget
+baseline has it too; the 2030-31 rise is a policy decision Budget 2026 scores
+(Table 6.1, row 86). The fuel part of the rise depends on the multiplier.
+
+## Not modelled
+
+- Vans and van fuel (ITEPA 2003 s. 154 onwards).
+- Optional remuneration arrangements (s. 120A), shared cars (s. 148) and
+  pool cars (s. 167).
+- Classic cars (s. 147), cars without a CO2 emissions figure (s. 140) and
+  cars first registered before 1 January 1998 (s. 142).
+- Fuel provided for only part of the year (s. 152(2)).
+- Other benefits in kind.
+
+The survey data does not fill these inputs yet, so a population run scores
+the company car benefits at zero until a dataset does.
+
+[s120]: https://www.legislation.gov.uk/ukpga/2003/1/section/120
+[s121]: https://www.legislation.gov.uk/ukpga/2003/1/section/121
+[s139]: https://www.legislation.gov.uk/ukpga/2003/1/section/139
+[s141]: https://www.legislation.gov.uk/ukpga/2003/1/section/141
+[s149]: https://www.legislation.gov.uk/ukpga/2003/1/section/149
+[s150]: https://www.legislation.gov.uk/ukpga/2003/1/section/150
+[sscba10]: https://www.legislation.gov.uk/ukpga/1992/4/section/10
+[sl29]: https://www.legislation.gov.uk/uksi/2009/470/regulation/29
+[uc55]: https://www.legislation.gov.uk/uksi/2013/376/regulation/55

policyengine_uk/data/fiscal_partition.yaml

@@ -743,6 +743,7 @@ exclusions:
   - {variable: employer_ni_fixed_employer_cost_change, kind: change_measure, head: nics_employer, note: "The wage change from an employer NI reform; employment_income already adds it."}
   - {variable: salary_sacrifice_broad_base_haircut, kind: change_measure, head: nics_employer, note: "A wage change employment_income already adds."}
   - {variable: ni_class_1_employer, kind: component, head: nics_employer}
+  - {variable: ni_class_1a, kind: component, head: nics_employer}
   - {variable: salary_sacrifice_pension_ni_employee, kind: measure_within, head: nics_individual, note: "The excess sacrifice is added back to ni_class_1_income, so Class 1 already charges it."}
   - {variable: salary_sacrifice_pension_ni_employer, kind: measure_within, head: nics_employer, note: "As above, for employer Class 1."}
   - {variable: tax, kind: composite, spans: [income_tax, nics_individual]}

policyengine_uk/data/uprating_indices.yaml

@@ -46,6 +46,11 @@ gov.economic_assumptions.yoy_growth.obr.consumer_price_index:
 - childcare_expenses
 - clothing_and_footwear_consumption
 - communication_consumption
+# Company car prices and the payments that go with them. CPI stands in for
+# a new-car price index, which the OBR does not forecast.
+- company_car_capital_contributions
+- company_car_list_price
+- company_car_private_use_payments
 - education_consumption
 - esa_contrib_reported
 - esa_income_reported

policyengine_uk/parameters/gov/hmrc/income_tax/benefits_in_kind/README.md

@@ -0,0 +1 @@
+# Benefits in kind

policyengine_uk/parameters/gov/hmrc/income_tax/benefits_in_kind/car_fuel/README.md

@@ -0,0 +1 @@
+# Car fuel

policyengine_uk/parameters/gov/hmrc/income_tax/benefits_in_kind/car_fuel/multiplier.yaml

@@ -0,0 +1,64 @@
+description: Amount to which the company car's appropriate percentage is applied to give the cash equivalent of fuel provided for its private use (the car fuel benefit charge multiplier).
+# The Treasury sets this by order under ITEPA 2003 s. 170(5); no statute
+# indexes it. The 2027-28 figure is announced: Budget 2026 OOTLAR paragraph
+# 2.6 gives £30,200 (September CPI uprating), and the Treasury order is not
+# yet made. It is in the baseline although the Budget 2026 rise in the
+# appropriate percentages for 2030-31 is not: that rise is a policy decision
+# Budget 2026 scores (Table 6.1, row 86), while this is the annual CPI
+# uprating, which the Budget lists among its other announcements and does
+# not score, so a pre-Budget baseline has it too. From 2028-29 the values
+# are a CPI projection, as the government has uprated the figure by
+# September CPI each year; none is announced.
+values:
+  2020-04-06:
+    value: 24_500
+    metadata:
+      reference:
+        - title: The Van Benefit and Car and Van Fuel Benefit Order 2020 (SI 2020/199) art. 2
+          href: https://www.legislation.gov.uk/uksi/2020/199/article/2/made
+  2021-04-06:
+    value: 24_600
+    metadata:
+      reference:
+        - title: The Van Benefit and Car and Van Fuel Benefit Order 2021 (SI 2021/248) art. 2
+          href: https://www.legislation.gov.uk/uksi/2021/248/article/2/made
+  2022-04-06:
+    value: 25_300
+    metadata:
+      reference:
+        - title: The Van Benefit and Car and Van Fuel Benefit (No. 2) Order 2021 (SI 2021/1422) art. 2
+          href: https://www.legislation.gov.uk/uksi/2021/1422/article/2/made
+  2023-04-06:
+    value: 27_800
+    metadata:
+      reference:
+        - title: The Van Benefit and Car and Fuel Benefit Order 2022 (SI 2022/1288) art. 2 (tax year 2023-24 and subsequent tax years)
+          href: https://www.legislation.gov.uk/uksi/2022/1288/article/2/made
+  2025-04-06:
+    value: 28_200
+    metadata:
+      reference:
+        - title: The Van Benefit and Car and Van Fuel Benefit Order 2024 (SI 2024/1349) art. 2(2)
+          href: https://www.legislation.gov.uk/uksi/2024/1349/article/2/made
+  2026-04-06:
+    value: 29_200
+    metadata:
+      reference:
+        - title: The Van Benefit and Car and Van Fuel Benefit Order 2025 (SI 2025/1254) art. 2(2)
+          href: https://www.legislation.gov.uk/uksi/2025/1254/article/2/made
+  2027-04-06:
+    value: 30_200
+    metadata:
+      reference:
+        - title: Budget 2026, overview of tax legislation and rates, paragraph 2.6
+          href: https://www.gov.uk/government/publications/budget-2026-overview-of-tax-legislation-and-rates-ootlar/budget-2026-overview-of-tax-legislation-and-rates-ootlar
+metadata:
+  unit: currency-GBP
+  period: year
+  label: Car fuel benefit charge multiplier
+  uprating: gov.economic_assumptions.indices.obr.consumer_price_index
+  reference:
+    - title: Income Tax (Earnings and Pensions) Act 2003 s. 150(1)
+      href: https://www.legislation.gov.uk/ukpga/2003/1/section/150
+    - title: Income Tax (Earnings and Pensions) Act 2003 s. 170(5)
+      href: https://www.legislation.gov.uk/ukpga/2003/1/section/170

policyengine_uk/parameters/gov/hmrc/income_tax/benefits_in_kind/company_car/README.md

@@ -0,0 +1 @@
+# Company car

policyengine_uk/parameters/gov/hmrc/income_tax/benefits_in_kind/company_car/appropriate_percentage/README.md

@@ -0,0 +1 @@
+# Appropriate percentage

policyengine_uk/parameters/gov/hmrc/income_tax/benefits_in_kind/company_car/appropriate_percentage/co2_band.yaml

@@ -0,0 +1,78 @@
+description: Appropriate percentage for a company car with a CO2 emissions figure of 51 to 74 g/km, by that figure rounded down to a whole number.
+# Finance Act 2025 s. 5 merges the 65-69 and 70-74 bands into one 65-74 band
+# from 2028-29, so the last two brackets have the same amount from then.
+# For 2020-21 and 2021-22 these are the rates for cars first registered
+# before 6 April 2020; registered_from_6_april_2020 holds the s. 139A rates.
+# The tax year 2030-31 keeps 2029-30's rates. Budget 2026 announced one
+# point more in every band; the company_car_tax_rise_2030 scenario applies it.
+metadata:
+  type: single_amount
+  threshold_unit: g/km
+  amount_unit: /1
+  period: year
+  label: Company car appropriate percentage by CO2 emissions, 51 to 74 g/km
+  reference:
+    - title: Income Tax (Earnings and Pensions) Act 2003 s. 139(1) and (2)(a)
+      href: https://www.legislation.gov.uk/ukpga/2003/1/section/139
+    - title: Finance (No. 2) Act 2017 s. 2(2) (tax years 2020-21 to 2024-25)
+      href: https://www.legislation.gov.uk/ukpga/2017/32/section/2/enacted
+    - title: Finance Act 2023 s. 11 (tax years 2025-26, 2026-27 and 2027-28)
+      href: https://www.legislation.gov.uk/ukpga/2023/1/section/11/enacted
+    - title: Finance Act 2025 s. 5(2) (tax year 2028-29)
+      href: https://www.legislation.gov.uk/ukpga/2025/8/section/5/enacted
+    - title: Finance Act 2025 s. 6(2) (tax year 2029-30 and subsequent tax years)
+      href: https://www.legislation.gov.uk/ukpga/2025/8/section/6/enacted
+    - title: "HMRC 480 Appendix 2: appropriate percentages for 2020-21 to 2026-27"
+      href: https://www.gov.uk/guidance/company-car-benefit-the-appropriate-percentage-480-appendix-2
+brackets:
+  # 51 to 54 g/km.
+  - threshold:
+      2020-04-06: 51
+    amount:
+      2020-04-06: 0.15
+      2025-04-06: 0.16
+      2026-04-06: 0.17
+      2027-04-06: 0.18
+      2028-04-06: 0.19
+      2029-04-06: 0.20
+  # 55 to 59 g/km.
+  - threshold:
+      2020-04-06: 55
+    amount:
+      2020-04-06: 0.16
+      2025-04-06: 0.17
+      2026-04-06: 0.18
+      2027-04-06: 0.19
+      2028-04-06: 0.20
+      2029-04-06: 0.21
+  # 60 to 64 g/km.
+  - threshold:
+      2020-04-06: 60
+    amount:
+      2020-04-06: 0.17
+      2025-04-06: 0.18
+      2026-04-06: 0.19
+      2027-04-06: 0.20
+      2028-04-06: 0.21
+      2029-04-06: 0.22
+  # 65 to 69 g/km.
+  - threshold:
+      2020-04-06: 65
+    amount:
+      2020-04-06: 0.18
+      2025-04-06: 0.19
+      2026-04-06: 0.20
+      2027-04-06: 0.21
+      2028-04-06: 0.22
+      2029-04-06: 0.23
+  # 70 to 74 g/km. In 2027-28 Finance Act 2023 s. 11(7) keeps it at 21%,
+  # level with 65-69 g/km and with the 75 g/km rate.
+  - threshold:
+      2020-04-06: 70
+    amount:
+      2020-04-06: 0.19
+      2025-04-06: 0.20
+      2026-04-06: 0.21
+      2027-04-06: 0.21
+      2028-04-06: 0.22
+      2029-04-06: 0.23

policyengine_uk/parameters/gov/hmrc/income_tax/benefits_in_kind/company_car/appropriate_percentage/diesel_supplement.yaml

@@ -0,0 +1,12 @@
+description: Percentage points added to the appropriate percentage of a company car propelled solely by diesel that does not meet the Euro 6d (RDE2) emissions standard, up to the maximum appropriate percentage.
+values:
+  2020-04-06: 0.04
+metadata:
+  unit: /1
+  period: year
+  label: Company car diesel supplement
+  reference:
+    - title: Income Tax (Earnings and Pensions) Act 2003 s. 141
+      href: https://www.legislation.gov.uk/ukpga/2003/1/section/141
+    - title: Finance Act 2018 s. 9(3)(b) (4 percentage points from 2018-19)
+      href: https://www.legislation.gov.uk/ukpga/2018/3/section/9/enacted