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Fix Scottish top rate threshold to use correct above-PA value #1488

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Merged
vahid-ahmadi merged 3 commits into from
Jan 21, 2026
Merged

Fix Scottish top rate threshold to use correct above-PA value #1488

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5b61e2c
Fix Scottish top rate threshold to use correct above-PA value
vahid-ahmadi Jan 21, 2026
52a13d8
Add changelog entry
vahid-ahmadi Jan 21, 2026
1eb70cc
Add SFC reference, unit tests, and fix changelog formatting
vahid-ahmadi Jan 21, 2026
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7 changes: 7 additions & 0 deletions changelog_entry.yaml
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Original file line number Diff line number Diff line change
@@ -0,0 +1,7 @@
- bump: patch
changes:
fixed:
- Scottish top rate (48%) threshold corrected from 125,140 to 112,570 (above
personal allowance). The threshold was incorrectly stored as the total income
value instead of the amount above PA, causing the top rate to effectively start
at 137,710 instead of 125,140.
10 changes: 7 additions & 3 deletions policyengine_uk/parameters/gov/hmrc/income_tax/rates/scotland/rates.yaml
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Expand Up @@ -71,10 +71,12 @@ brackets:
- threshold:
values:
2017-04-06: null
2024-04-06: 125_140
2025-04-06: 125_140
# Top rate threshold: £125,140 total income = £112,570 above PA
# (£125,140 - £12,570 personal allowance)
2024-04-06: 112_570
2025-04-06: 112_570
# Scottish Budget 2025-26 announced freeze through 2026-27
2026-04-06: 125_140
2026-04-06: 112_570
metadata:
uprating: gov.economic_assumptions.indices.obr.consumer_price_index
rate:
Expand All @@ -89,3 +91,5 @@ metadata:
href: https://www.gov.uk/government/publications/rates-and-allowances-income-tax/income-tax-rates-and-allowances-current-and-past
- title: Scottish Budget 2025-26 - Higher rate threshold freeze
href: https://www.gov.scot/publications/scottish-budget-2025-26/
- title: Scottish Fiscal Commission - Scotland's Economic and Fiscal Forecasts January 2026
href: https://fiscalcommission.scot/wp-content/uploads/2026/01/Scotlands-Economic-and-Fiscal-Forecasts-January-2026-revised-13-01-2026.pdf
26 changes: 26 additions & 0 deletions policyengine_uk/tests/policy/baseline/finance/tax/income_tax/scottish_rates.yaml
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Expand Up @@ -6,3 +6,29 @@
region: SCOTLAND
output:
tax_band: STARTER

- name: Scottish top rate applies at 125140 total income
period: 2025
absolute_error_margin: 0
input:
# Top rate (48%) starts at 125,140 total income (112,570 above PA)
# At this income, PA is fully tapered, so taxable income = 125,140
# This exceeds the top rate threshold of 112,570
adjusted_net_income: 125140
region: SCOTLAND
output:
# TaxBand enum uses ADDITIONAL for both Advanced (45%) and Top (48%) rates
tax_band: ADDITIONAL

- name: Scottish income above advanced threshold
period: 2025
absolute_error_margin: 0
input:
# 100,000 income is above advanced rate threshold (62,430 above PA)
# but below top rate threshold (112,570 above PA)
# PA at 100,000 is 12,570 (not yet tapered), taxable = 87,430
adjusted_net_income: 100000
region: SCOTLAND
output:
# TaxBand enum uses ADDITIONAL for both Advanced (45%) and Top (48%) rates
tax_band: ADDITIONAL