# UK policy lab, model 1.5

Route: `/simulator/`. Research reviewed on 14 September 2026; CGT evidence revised on 15 September 2026. Sources, classifications,
and links live in `src/lib/policy-baseline.ts` and `src/lib/policy-sources.ts` and are rendered on the page.
The JSON export includes the data snapshot, source register and assumptions classification.
All equations live in `src/lib/policy-model.ts`; the browser and tests use that same module.

This is an educational sensitivity model, not a forecast, tax calculator, fiscal scorecard
or a welfare ranking. There is no estimated general-equilibrium model or household microdata.
Main rates were verified against 2026/27 HMRC guidance. Revenue sensitivities still use
HMRC's June 2025 ready reckoner: HMRC deferred its July 2026 update on 6 July. These
older estimates have not been rebased for subsequent policy changes. Rates, thresholds,
reliefs and devolved systems are not represented comprehensively.

## Units and timing

Money is in £ billions, except household outputs in £. Monetary scales are frozen across
model years; inflation and nominal growth are not projected. Source releases refer to
different periods and have NOT been inflation-rebased into a single price year, so this
is an approximate contemporary-scale comparison, not a consistent national-accounts forecast.
GDP uses £3,097.533bn: latest four ONS current-price SA quarters (2025 Q3 to 2026 Q2),
released 13 August 2026. Households use the rounded 29.0m ONS 2025 estimate, published
17 April 2026. Labour force is 36.241m (34.469m employed + 1.772m unemployed),
April–June 2026, published 18 August. The official 4.9% unemployment rate is context;
the toy reports changes. Next scheduled labour release is 15 September 2026.

Latest land: ONS preliminary 2025 whole-economy £6.9tn, published 10 June 2026.
Spending: HM Treasury July 2026, Table 5.2, 2025/26 first outturn (revised 29 July).
Student balances: SLC UK comparison at 31 March 2026, published 18 June 2026.
Full dated sources and qualifications appear in the on-page data register and JSON export.
These are manually reviewed snapshots, not live updates.
National outputs and income-group outputs are differences from unchanged reference policy, not absolute UK forecasts. Salary examples additionally show before/after take-home pay.
Year 1 is the first implementation year, not a calendar forecast. Permanent tax changes
start in year 1. Non-CGT HMRC 2026/27 coefficients are kept constant. The CGT scenario
instead uses the three published annual estimates for April 2026 implementation,
holding the third-year effect constant afterwards as an explicit assumption. Large rate changes and combinations are especially uncertain.
The GDP chart plots the percentage difference in the GDP **level**, not its growth rate.

## Receipts

HMRC anchors, £bn per percentage point: basic income tax 6.9; higher rate 1.6;
employee main Class 1 NI 5.35; employer NI 11.15; corporation tax 3.6;
standard VAT 8.8. Fuel duty is 0.24 per **percent proportional** change in duty.
Corporation tax moves BOTH main and small-profits rates together, as in that source.
Income tax uses HMRC's UK Exchequer coverage and block-grant effects, not separately
modelled Scottish/Welsh bands. The additional rate, allowances and thresholds stay fixed.
Existing tax instruments are added using the ready-reckoner approximation, which cannot
fully capture interactions (including VAT/fuel duty or incorporation decisions).

Annual wealth tax: 12 × rate × collection response. At 2% and central collection it raises
£24bn, calibrated to the campaign estimate, which already allows for behavioural effects.
The 0.65/1/1.1 response factors are sensitivity around that net anchor, not additional
claims about measured avoidance rates. No separate migration estimate is presented.
The levy applies to net wealth in excess of £10m. Asset composition and future erosion of
the base are not projected.

Alternative minimum tax: max(0, 6 × rate − credits) × collection response. It assumes a
£600bn total billionaire cohort above a UK £1bn threshold. The floor is on **all** cohort
wealth, not just the excess. Credits = £1.8bn (0.3% of £600bn) + 5% of positive additional
dividend receipts + 3% of land receipts. Additional CGT is not credited; policy overlaps are not costed.
Those overlap shares are illustrative; income/corporation tax changes are not traced to
individual billionaires. The two wealth-tax designs cannot be stacked. The UK yield is
not Zucman's global estimate. His original threshold is $1bn.

Land: rate / 100 × £6,900bn official land × 90% assumed taxable coverage × 90% assumed
collection = £55.89bn per rate point. The official total includes land outside any chosen
tax base; coverage is not an ONS statistic. This is an additional
annual land-only tax, with no removal of council tax, business rates or stamp duties.
No capitalisation into land prices, exemptions or transitional deferrals are simulated.

### CGT: revenue anchors and annual timing

CGT is a normal budget control with two alternative policies; both affect receipts,
borrowing, accumulated debt and the modelled financing response in every year.
`src/lib/policy-cgt.ts` stores the source figures separately from the timing assumptions.

- `none`: no CGT change.
- `hmrc10`: increase the higher main and residential-property CGT rates from 24% to
  34%, leaving the lower rate and reliefs unchanged. Use −£0.540bn, −£2.060bn and
  −£3.565bn in years 1–3, respectively, from
  [HMRC June 2025, section 13](https://www.gov.uk/government/statistics/direct-effects-of-illustrative-tax-changes/direct-effects-of-illustrative-tax-changes-bulletin-january-2025).
  These correspond to 2026/27–2028/29 for April 2026 implementation and include
  behavioural effects across CGT, income tax and stamp duty land tax.
  **Years 4–10 hold −£3.565bn constant. This is our continuation assumption,
  not an HMRC forecast.** No rate scaling or assumed Laffer-curve peak is used.
- `centax`: implement the complete package costed by
  [CenTax August 2025, section 7 and table 1](https://centax.org.uk/wp-content/uploads/2025/09/TaxRateEqualisation-TechnicalNote.pdf):
  gains taxed at 20%/40%/45%, an allowance for a normal investment return, carry-over
  of accrued gains at death and changes to taxation on arrival/departure. Excludes
  further carried-interest reform. The £11.3bn estimate includes behaviour and uses
  uprated 2019/20 taxpayer data with a 2026/27 policy baseline including October 2024
  changes. **Apply +£11.3bn each year from year 1 through year 10. Immediate full
  annual yield is our simplifying timing assumption, not a published transition
  forecast.** There is no phase-in, inflation uplift or tax-base growth in this model.

The Stevenson-inspired preset uses the complete CenTax package as an explicit
interpretation of CGT reform; it is not a costing of rate equalisation alone or an
endorsed Stevenson proposal. Both CGT choices keep their own specified rates when
income-tax sliders change. Standalone costings are added, without a joint behavioural
model; interactions may materially change the result. All three macro assumption sets
use the same CGT receipts: the displayed ranges do not measure CGT costing uncertainty.

Each exported annual `cgt` record contains numeric revenue, source, reference period,
and a `basis` distinguishing `published`, `held-constant`, `annualised-package` and
`reference`. Source anchors are also exported as `cgtEvidence`; timing limitations are
recorded in `cgtMethod` and the existing on-page policy workings/source notes.

CGT household incidence and GDP effects remain unestimated, as recorded by
`householdAndGdpExcludeCgt`. A behavioural revenue loss is not converted into a household
tax cut or a GDP boost. CGT still affects government borrowing and financing costs.
No additional CGT credit is applied against the billionaire minimum tax; overlaps
between those policies would require a joint costing.

Legacy links using `equalise` or a positive numeric CGT slider map to the complete
reform option. The page announces this change in the existing action-status area and
labels the selected policy as including relief reform. The old arbitrary £8bn anchor
is not restored. The former uncosted option and prominent partial-results panel are removed.

Dividends: reform fraction × (3 / 6 / 9) × max(0,
[0.4 × (basic − 10.75) + 0.6 × (higher − 35.75)] / 8.25).
The dividend rates changed on 6 April 2026. The original 8.25-point normalisation stays
fixed, so the smaller current gap yields £4.545bn centrally at default income rates,
rather than silently recalibrating the reform to raise £6bn again. The weights and
revenue-per-gap sensitivity remain assumptions.
Inheritance reliefs: reform fraction × (2 / 4 / 6). Neither package is an official costing.

## GDP

Three sets of assumptions are evaluated; displayed bounds take the minimum and maximum
**for each metric**. They are not confidence intervals, probabilities or an exhaustive
range of possible outcomes. A favourable GDP case need not have the smallest borrowing.

Demand (£bn) = [−sum(tax receipt × multiplier) + public investment
+ 0.4 × repayments avoided + 0.5 × domestic stimulus] × fade × response.
Tax multipliers: 0.3 income/NI; 0.35 VAT/fuel; 0.1 other costed taxes, excluding CGT.
Fade = max(0, 1 − (year−1)/4); response = 0.6/1/1.4.

Supply (percentage points of GDP level) = year/10 × (0.4/1/1.5) ×
[0.04 × basic-rate cut + 0.015 × higher-rate cut + 0.04 × employee NI cut
+ 0.045 × employer NI cut + 0.035 × corporation-tax cut
+ 0.1 × land rate + 0.025 × annual extra investment (£bn)].
Wealth drag = wealth rate × (0.2/0.08/0.02) × year/10, scaled by 0.4 for minimum tax.
GDP % = demand / 3097.533 × 100 + supply − wealth drag + EU gain.
These supply coefficients are illustrative choices, not causal estimates from the sources.

EU gain = (0/2/4.2)% × max(0, (year−2)/8). Entry is assumed at the start of year 3;
net annual contributions are (18/12/10) £bn from then on. OBR's estimated cost of leaving
does not establish the benefit of rejoining. Population, migration, accession negotiations,
EU tax constraints, euro membership and sectoral adjustment are not modelled. In particular,
the EU checkbox is not a test of whether the tax package satisfies future accession terms.

## Budget and one-off policies

Growth-related tax feedback = 35% × GDP change in £bn; this is an assumption.
Primary additional borrowing = investment + student repayments forgone + stimulus
+ EU contributions + unemployment benefit change − direct tax change − feedback.
Annual additional borrowing also includes the rate-sensitive interest calculation below.
Cumulative additional borrowing sums those annual flows. It is not total public debt or
an official change in PSNB; a complete inflation model and fiscal rules are omitted.
Tax surpluses reduce borrowing automatically; they are not silently spent or rebated.

Stimulus: £1,000 once, in year 1, for all assumed British citizens, including children and
those abroad. Default eligible count 65m; adjustable 50–80m. This is a scenario input, not
an estimate of citizenship from resident population. The model assumes 92% of payments
reach domestic households; the full amount is charged to the budget. The direct transfer
and its demand boost disappear after year 1; financing effects remain in later years.

Student cancellation applies once to **existing** UK income-contingent student loans
(including relevant EU borrowers in the SLC totals). Official rounded face value (£324.8bn)
and assumed recoverable asset value (£200bn) are shown separately. Neither is treated as
an immediate cash payment or added again to borrowing. Repayments forgone start at £6.0251bn,
the sum of official 2025/26 net repayments posted to loan accounts: England HE £5,339.3m,
England FE £46.7m, Wales £242.6m, NI £186.9m, Scotland £209.6m. England uses corrected
2 July 2026 tables: Table 1A BR27 and Table 1B Q24, rounded to £0.1m as published.
Posted repayments differ from collection/earnings-year series. Using them as cancellation
cash relief is a proxy, not an official cancellation costing. The model assumes they
shrink 6% annually as the cancelled cohort runs off. The asset loss is a separate
balance-sheet effect, not an official public-debt/deficit classification. Future loans
continue. Actual repayment profiles, write-offs and accounting treatment require a cohort model.

## Household income and distribution

The results start with two distinct views. Neither is a prediction of an individual household:

1. **Pay by tax bracket:** one illustrative employee at £12k, £30k, £60k, £110k and £150k
   gross annual salary. Brackets apply to individuals, not households. These examples use
   England/Wales/Northern Ireland 2026/27 rules; Scotland is not covered. Only the basic
   and higher income-tax rates and main employee NI slider affect this calculation.
   The £12,570 allowance tapers by £1 per £2 above £100,000, reaching zero at £125,140.
   Taxable basic-band width is £37,700; higher tax applies up to £125,140 gross income
   after allowing for the taper; additional tax remains 45%. Employee NI applies at the
   selected main rate between £12,570 and £50,270, and 2% above it. Take-home = salary
   minus income tax minus employee NI. Salaries stay fixed in all model years. Pension
   deductions, PAYE pay-period rounding, other income, benefits and student loans are
   excluded. These examples are separate from, and never added to, the national model.
   Source: [HMRC income-tax rules](https://www.gov.uk/income-tax-rates) and
   [HMRC employer thresholds 2026/27](https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027).
   Equations: `src/lib/policy-households.ts`.
2. **Whole policy by income group:** five equal-sized income fifths with changes split
   into income taxes and assumed business-tax pass-through; benefits, cheques and
   repayments avoided; living costs (VAT/fuel); taxes on assets (wealth, land and
   inheritance; CGT effects are excluded); and the assumed GDP-to-income effect.
   Income and transfers
   exclude asset levies, living-cost changes and the GDP assumption. Each group shows
   the cash subtotal before asset taxes, the asset-tax payment and total cash change.
   No baseline income levels are invented for these groups. Wealth rank differs from
   income rank, and the allocation weights below are assumptions, not household microdata.

Yearly/monthly switches change presentation only: monthly = annual / 12, including the
one-off cheque. They do not turn that cheque into a monthly policy. Exported model and
salary figures remain annual; `householdDisplayPeriod` records the display preference.
The legacy `household` mean and `fifths` total-cash fields remain in exports and an explicit
accounting check in the workings, not a headline disposable-income statistic. The new
`householdGroups` field exposes every channel. Public-service benefits, asset price
changes and cancelled debt face values are not valued as income here.

Model 1.3 reorganises presentation without changing the household incidence assumptions.
It also corrects the VAT price impulse to its documented 0.3 coefficient; version 1.2
incorrectly used the 8.8 revenue-costing coefficient in that expression. This affects
year-1 rate and subsequent financing results when VAT is changed, not VAT receipts.

Tax incidence is allocated to five equal-sized household income groups using assumed
shares, from lowest to highest income:

| Channel | Shares |
|---|---|
| Basic income tax | .02, .09, .19, .29, .41 |
| Higher income tax | 0, 0, .01, .09, .90 |
| Employee/employer NI | .02, .12, .24, .30, .32 |
| Wealth / inheritance | 0, 0, 0, .02, .98 |
| Land | .03, .08, .14, .23, .52 |
| Capital / dividends / corporation | 0, .01, .03, .11, .85 |
| VAT / fuel | .09, .14, .18, .24, .35 |
| Student repayments | .01, .07, .20, .32, .40 |
| Stimulus | .20, .20, .20, .20, .20 |
| GDP-to-income effect | .06, .12, .18, .25, .39 |
| Unemployment benefit change | .55, .30, .10, .04, .01 |

All direct tax changes pass to households except corporation tax (50%) and employer NI
(20% + 60% × year/10); the remainder is foreign or retained business incidence.
The GDP-to-income channel is 50% of the aggregate GDP change. These additive channels
approximate incidence rather than enforce a complete national-accounts identity.
The average of the five total-cash group changes equals the legacy all-household cash mean. Wealth and income ranks
differ in reality; fifths hide substantial variation, especially among the very richest.
There is no claim to predict median income, poverty, Gini or inflation from this data.

## Unemployment and government spending

Unemployment changes by −(0.2/0.3/0.4) × the cyclical demand gap, in percentage points.
The central response is −0.3 points per 1% gap. The Bank of England's discussion of Okun's
law informs the mechanism, not this exact calibration. Productivity/supply gains are not
treated as falls in unemployment. Cyclical effects fade by year 5; structural unemployment
and labour-force participation are fixed. We report a **change**, not a current unemployment
level. Equivalent unemployed people = rate change ÷ 100 × official 36.241m labour force, held fixed.
Annual benefit spending changes by that number × £8,000 ÷ 1bn. Benefits feed the budget
and household cash but are not iterated back through the demand multiplier (one-pass model).

The spending pie starts from Treasury's £1,360.122bn 2025/26 Total Managed Expenditure:
social protection 407.270, health 257.542, education 125.721, debt interest & transactions
130.305, defence 65.418, economic affairs 93.959, and residual other spending & adjustments
279.907. Source: July 2026 Public Spending Statistics, Table 5.2 column G (£m / 1,000).
Debt transactions include central/local government, public corporations, Bank of England
and pension-scheme flows; they are not just central-government net debt interest.
The residual includes accounting adjustments of £132.474bn and remaining functions,
including the negative £0.166bn EU transaction line. It is derived by subtraction from TME,
so the pie reconciles exactly and the negative EU baseline is not misrepresented as a slice.
TME includes non-cash/accrual adjustments; this is not a pure cash expenditure statement.
Existing service/capital spending is contained in those baseline categories. New investment appears as a separate **incremental**
slice, avoiding counting it again within health or education. No general spending cuts,
inflation uprating or demographic spending pressures are assumed.

Scenario spending = £1,360.122bn + additional investment + year-1 stimulus + EU contribution
+ unemployment benefit change + interest-cost change. Lost student repayments are reduced
receipts, not spending; debt write-offs are excluded from this spending illustration. Tax changes
affect the funding mix and interest costs, not automatically the budgets for services.
If extreme assumptions yield a negative spending category, the pie is withheld and the
signed table and an explanation are shown. Negative spending is not silently clipped.

## Bank Rate, gilt yields and bond prices

This is a transparent market sensitivity overlay, **not a bond-market forecast**, nor an
estimated MPC reaction function. The adjustable coefficients are user assumptions.
Rate changes are reported in basis points (100bp = 1 percentage point), versus reference
paths. The Bank of England’s latest policy rate is 3.75% (30 July 2026 decision), shown
only for context; it is not added to modelled changes to claim a future absolute rate.
The 4% reference gilt yield/financing rate is an assumption, not a live market quote.

Bank Rate change (bp) = [reaction × cyclical demand gap + 25 × VAT impulse] × (1.5/1/0.5).
The reaction defaults to 50bp per 1% demand gap and is adjustable 0–100.
VAT impulse = 0.3 × standard VAT-rate change in year 1; zero later. It is a stylised
first-year inflation impulse, not a complete CPI forecast. The 25bp response allows
partial monetary reaction to it. Supply-led growth/EU productivity do not automatically
increase Bank Rate. The demand and VAT impulse are unchanged by these rate calculations.

Gilt yield change (bp) = average expected Bank Rate change + funding premium + market shock.
The expected-rate component averages the next ten years of the model's Bank Rate changes;
years beyond year 10 have zero change from the reference path. The funding premium uses
projected extra debt/GDP = [accumulated actual additional borrowing before this year
+ all remaining **primary** additional borrowing through year 10] ÷ £3,097.533bn × 100.
This proxy omits future interest feedback from the expected-debt figure to avoid a
circular forecast; it is not an official debt ratio. The primary flows already include
the GDP-related revenue and benefit changes.

Funding premium = that ratio × user sensitivity (default 8bp per percentage point,
adjustable 0–20) × (1.5/1/0.5). The exogenous market/credibility shock is −100 to +200bp,
default zero, and persists across all ten years. It is not inferred from any party or
politician. The yield decomposition is motivated by Bank of England descriptions of
expected short rates and term premia, not evidence for this particular debt coefficient.

The illustrative fixed-coupon gilt has £100 face value, a £4 annual coupon and ten years
remaining. With y = 0.04 + gilt change / 10,000, price = sum[4/(1+y)^t, t=1..10]
+ 100/(1+y)^10. Its reference price is £100, so price minus 100 is the percentage change.
This is an exact discounted-cash-flow illustration; it is not an approximation to a
specific listed bond or the return from holding it for the selected policy horizon.

Interest-cost feedback is recursive:

1. Assumed £2,000bn conventional gilt stock: 1/14 refinances in each model year at the
   scenario gilt yield. The interest difference on each refinanced cohort persists.
2. Assumed £500bn floating-rate exposure: interest difference = 500 × Bank Rate change / 10,000.
3. Additional borrowing at each year-end acquires a fixed coupon of 4% + that year's
   gilt change / 10,000, accruing from the next year. Reductions in debt save these coupons.
4. Total additional annual interest = accumulated reference-cohort refinancing differences
   + floating-rate difference + coupons on prior additional borrowing. Add it to primary
   borrowing, then record the new borrowing cohort.

This preserves fixed coupons rather than repricing all existing debt immediately. The
assumed conventional and floating stocks are stylised and do not reproduce the OBR debt
book, reserve remuneration policy, APF cash flows, net financial assets or index-linked
debt. Rate changes feed the budget but **do not** feed back into GDP, household mortgages,
saving income, credit availability or unemployment. Consequently this is not a closed
macroeconomic equilibrium. Global rates, exchange rates, liquidity, QE/QT and nonlinear
confidence crises are not projected. Extremely large changes can leave the realistic
domain of these simple linear sensitivities, even if the arithmetic is finite.

## Current tax-rate scope

Basic/higher income rates 20%/40%; employee/employer main NI 8%/15%; corporation main/small
profits 25%/19%; standard VAT 20%; main CGT 18%/24%; dividend ordinary/upper 10.75%/35.75%.
Fuel petrol/diesel remains 52.95p/litre through 31 December 2026 under HMRC's amended
22 May 2026 notice, superseding the original September increase announcement. Fuel controls
are proportional changes; the older ready-reckoner coefficient is not a newly estimated
2026 elasticity. Scheduled future rates are not projected in the frozen reference.
Inheritance reform is a hypothetical incremental package, not a costing of enacted changes.

## Maintaining the data

1. Open each primary release in `policy-baseline.ts` and check its period, corrections and
   next release. Check current tax guidance and HMRC's release schedule for amendments.
2. Update the numerical inputs, observation dates and source links together. Derived GDP,
   labour force, repayment and residual spending values must reconcile to the components.
3. Keep official observations, official published modelling and toy assumptions separate.
   Do not promote an assumption to official data just because a related official source exists.
4. Update the check date only after review. Model changes get a new model version. Refresh
   explanatory text and this document; run the model, integration and mobile checks.
5. No automated live feed is claimed. In particular the next labour release is due
   15 September 2026; this snapshot does not contain its unpublished figures.

## Verification

`npm run test:policy` checks reference neutrality, units, budget reconciliation, aggregate
household consistency, single-payment timing, minimum-tax credits, cancellation accounting,
scenario parsing, spending reconciliation, bond pricing, rate feedback and finite outputs
at policy extremes. `npm run check` and `npm run build`
validate the Astro integration. Browser checks exercise controls, links, sharing, reset,
export, charts, keyboard inputs and mobile overflow.


## Dated official data register

Checked 2026-09-14.

### Salary-example thresholds: £12,570 allowance · £50,270 NI upper limit

Official rules / illustrative salaries. Covers: Tax year 2026/27 · England, Wales, Northern Ireland. Published/updated: Official current rates; checked 14 September 2026.

Basic taxable band £37,700; allowance falls £1 per £2 above £100,000; additional rate 45% above £125,140. Employee NI uses £12,570/£50,270 and 8%/2% (2026/27 employer guidance linked below). Salaries are examples, not band averages. No pensions, benefits, loans, other income or Scottish bands.

[HMRC · Income Tax rates](https://www.gov.uk/income-tax-rates)

### Annual GDP scale: £3,097.533bn

Derived from official data. Covers: 2025 Q3–2026 Q2. Published/updated: 13 August 2026.

Sum of four seasonally adjusted current-price quarters (£m): 762,832 + 767,478 + 780,594 + 786,629. Held fixed in the toy; not a GDP forecast.

[ONS · YBHA](https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/ybha/pn2)

### UK households: 29.0m

Official estimate. Covers: 2025. Published/updated: 17 April 2026.

Published rounded household count; denominator for mean cash effects.

[ONS](https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/bulletins/familiesandhouseholds/2025)

### Labour force / unemployment: 36.241m / 4.9%

Official survey estimates. Covers: April–June 2026. Published/updated: 18 August 2026.

Labour force = 34.469m employed + 1.772m unemployed, age 16+, seasonally adjusted. The survey has quality limitations. Next scheduled release: 15 September 2026. Only the denominator feeds the model; 4.9% is context.

[ONS · Labour Force Survey](https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/employmentintheuk/august2026)

### Government spending: £1,360.122bn

Official first outturn. Covers: Financial year 2025/26. Published/updated: 16 July 2026; revised 29 July.

Total Managed Expenditure. Pie categories use Table 5.2, column G, divided by 1,000. Debt transactions include Bank of England and pension-scheme flows. Other includes accounting adjustments and the residual functions; this is wider than a cash services budget.

[HM Treasury · Table 5.2](https://www.gov.uk/government/statistics/public-spending-statistics-release-july-2026)

### UK land value: £6.9tn

Official preliminary estimate. Covers: 2025. Published/updated: 10 June 2026.

Rounded whole-economy land (non-produced assets). Taxable coverage of 90% and collection of 90% are separate assumptions, not ONS estimates.

[ONS · preliminary balance sheet](https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/bulletins/thenationalbalancesheetandcapitalstockspreliminaryestimatesuk/2026)

### UK student-loan face value: £324.8bn

Official rounded total. Covers: 31 March 2026. Published/updated: 18 June 2026.

UK income-contingent higher-education loans plus England further-education loans. Includes relevant EU borrowers. Face value is not recoverable asset value or an immediate cash cancellation cost.

[Student Loans Company](https://www.gov.uk/government/statistics/uk-comparisons-to-financial-year-2026/uk-comparisons-to-financial-year-2026)

### UK annual student repayments: £6.0251bn

Sum of official rounded figures. Covers: Financial year 2025/26. Published/updated: 18 June 2026; corrected tables 2 July.

Net repayments posted to accounts (£m): England HE 5,339.3, England FE 46.7, Wales 242.6, Northern Ireland 186.9, Scotland 209.6. Posting dates differ from earnings/collection dates. Used as a starting proxy for repayments forgone; future runoff is assumed.

[SLC · national Table 1 / 1A / 1B](https://www.gov.uk/government/collections/student-loans-for-higher-and-further-education)

### Income tax / National Insurance: 20% / 40% · 8% / 15%

Current main rates. Covers: Tax year 2026/27. Published/updated: 2026/27 official guidance.

Basic/higher income tax and main employee/employer Class 1 NI. Scottish income bands, other NI bands, allowances and thresholds are outside this simplified control set.

[HMRC](https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027)

### Dividend tax: 10.75% / 35.75%

Current ordinary / upper rates. Covers: From 6 April 2026. Published/updated: 2026/27 rates table.

The two rates rose by 2 points in April 2026. The toy now closes the smaller remaining gap to income tax. The additional dividend rate is outside this control.

[HMRC](https://www.gov.uk/government/publications/rates-and-allowances-income-tax/income-tax-rates-and-allowances-current-and-past)

### Capital gains tax: 18% / 24%

Current main rates. Covers: Current main rates. Published/updated: Current official rates guidance.

Special relief rates and carried interest are not represented by these two main rates.

[HMRC](https://www.gov.uk/capital-gains-tax/rates)

### Corporation tax: 25% / 19%

Current main / small-profits rates. Covers: Financial year 2026. Published/updated: 1 April 2026 rates update.

Both rates move by the same number of points in this toy. Marginal relief is not separately modelled.

[HMRC](https://www.gov.uk/government/publications/rates-and-allowances-corporation-tax/rates-and-allowances-corporation-tax)

### Standard VAT: 20%

Current rate. Covers: Current standard rate. Published/updated: Current official rates guidance.

Reduced and zero rates are unchanged.

[HMRC](https://www.gov.uk/vat-rates)

### Petrol / diesel fuel duty: 52.95p/litre

Amended current policy. Covers: Cut extended to 31 December 2026. Published/updated: 22 May 2026 amended notice.

Supersedes the earlier September rise announcement. The slider uses proportional changes and an older HMRC revenue coefficient. The toy freezes the reference; it does not project scheduled future duty changes.

[HMRC](https://www.gov.uk/government/publications/amended-fuel-duty-rates-for-2026-to-2027/amended-fuel-duty-rates-2026-to-2027)

### Bank Rate: 3.75%

Official policy rate · context only. Covers: Latest decision: 30 July 2026. Published/updated: 30 July 2026.

Shown for context. Modelled rate changes are relative to a counterfactual path; adding them to today’s rate would not be an official forecast. The example bond still uses an explicitly assumed 4% yield.

[Bank of England](https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate)

### Tax revenue sensitivities: £0.24–11.15bn per unit

Older latest available modelling. Covers: 2026/27 column of June 2025 model. Published/updated: 24 June 2025.

Per point: basic 6.9, higher 1.6, employee NI 5.35, employer NI 11.15, corporation 3.6, VAT 8.8 (£bn). Fuel: 0.24 per proportional 1%. The July 2026 release was deferred; these have not been rebased to subsequent policy changes.

[HMRC](https://www.gov.uk/government/statistics/direct-effects-of-illustrative-tax-changes/direct-effects-of-illustrative-tax-changes-bulletin-january-2025)

## Assumption register

- **CGT scenarios: HMRC: −£0.540/2.060/3.565bn, then held flat; CenTax: +£11.3bn annually.** Both options enter the budget. Holding HMRC’s year-three loss constant and applying CenTax’s package yield from year 1 are timing assumptions, not published ten-year forecasts. Rates are fixed within each CGT option. Joint tax interactions and CGT household/GDP effects are not estimated.
- **Wealth taxes: £12bn per annual-tax point; £600bn billionaire cohort.** Annual yield follows a campaign estimate. Cohort size, £1.8bn existing-tax credit, overlap credits and collection responses are assumptions; the UK yields here are not official costings.
- **Land tax: 90% taxable coverage × 90% collection.** Applied to the official £6.9tn land total: £55.89bn per rate point. Coverage, exemptions and behavioural effects require a policy-specific valuation model.
- **Dividend / inheritance reform: Dividends £3/6/9bn × gap; inheritance £2/4/6bn.** Illustrative packages. Dividend calibration retains the old 8.25-point normalisation, with current 10.75%/35.75% rates: central full reform is £4.545bn at default income rates. Inheritance is additional hypothetical reform, not a costing of an enacted relief change.
- **Student cancellation: £200bn asset loss; repayments fall 6% each year.** Assumed recoverable value and runoff, separate from SLC face value and observed repayments. Not an official UK valuation or fiscal classification.
- **Stimulus eligibility: 65m citizens; 92% domestic share.** Adjustable eligibility assumption, not a measured count of British citizens worldwide. Resident population is not substituted for citizenship.
- **EU accession: Year 3; 0/2/4.2% GDP gain; £18/12/10bn annual contribution.** Scenarios, not agreed accession terms or an OBR forecast of rejoining.
- **Debt and bond illustration: £2tn conventional; £500bn floating; 14-year refinancing; 4% yield.** Stylised exposures and hypothetical bond. These are not a verified current debt portfolio or a live gilt quote.
- **Economic and household responses: Multipliers, supply effects, incidence weights, 35% tax feedback, £8,000 benefits.** All are model assumptions, as are unemployment, inflation and interest-rate response coefficients. Every numerical coefficient and distribution weight is documented in the full equations below.

## Research and source notes

- [Public Spending Statistics · July 2026 · Table 5.2](https://assets.publishing.service.gov.uk/media/6a574acd2cbe5d1c179a64fd/July_PSS_2026_Chapter_5.xlsx) — Official first outturn. The pie now uses 2025/26 Total Managed Expenditure of £1,360.122bn. Social protection £407.270bn, health £257.542bn, education £125.721bn, debt transactions £130.305bn, defence £65.418bn and economic affairs £93.959bn; the £279.907bn residual includes other functions and accounting adjustments. Debt transactions are broader than central-government debt interest.
- [Two puzzles: recent UK labour market dynamics (2024)](https://www.bankofengland.co.uk/speech/2024/may/megan-greene-speech-at-make-uk-the-current-state-of-britains-labour-market) — Labour-market relationship. Discusses the imperfect relationship between output and unemployment. We use an illustrative 0.2–0.4 percentage-point unemployment response per 1% cyclical demand gap (central 0.3), the latest ONS 36.241m labour force, held fixed, and £8,000 annual benefits per additional unemployed person. Productivity-only gains do not automatically reduce unemployment.
- [How monetary policy transmits (2024)](https://www.bankofengland.co.uk/quarterly-bulletin/2024/2024/about-a-rate-of-general-interest-how-monetary-policy-transmits) — Mechanisms, not rate forecasts. Explains how Bank Rate affects demand and inflation. The toy’s Bank Rate response is an adjustable assumption: 50 basis points per 1% demand gap by default, plus a small first-year VAT response. It is not an MPC reaction-function estimate.
- [Quantitative tightening: the story so far (2023)](https://www.bankofengland.co.uk/speech/2023/july/dave-ramsden-speech-on-quantitative-tightening-chaired-by-money-macro-and-finance-society) — Bond-market framework. Describes gilt yields as expected future short rates plus a term premium. We add an assumed 8bp funding premium per percentage point of projected extra debt/GDP, with an adjustable market shock. These coefficients are not estimated from this speech; global rates, liquidity and credibility may dominate.
- [Debt interest: drivers and sensitivities](https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/debt-interest-central-government-net/) — Official mechanism reference. Shows why gilt yields, Bank Rate and inflation affect public interest costs differently. Our stylised exposure is £2tn of conventional gilts refinancing over 14 years plus £500bn floating-rate exposure, with 4% reference financing. These are rounded toy inputs, not a reproduction of the OBR debt book.
- [Stevenson’s published proposals](https://garyseconomics.org/whats-the-solution/) — Campaign proposal. Supports 2% annually above £10m, equalising capital gains and dividends with income tax, and inheritance reform. His site quotes £22–24bn annual wealth-tax revenue. This is a campaign estimate, not an official costing.
- [A coordinated minimum tax on the very wealthy (2024)](https://taxobservatory.world/publication/a-blueprint-for-a-coordinated-minimum-effective-taxation-standard-for-ultra-high-net-worth-individuals/) — Research proposal. The blueprint sets a 2% effective tax floor for people above $1bn, with credit for existing taxes. Its $200–250bn revenue estimate is global. Our £1bn UK threshold, £600bn cohort and resulting UK revenue are illustrative adaptations.
- [Direct effects of illustrative tax changes · June 2025](https://www.gov.uk/government/statistics/direct-effects-of-illustrative-tax-changes/direct-effects-of-illustrative-tax-changes-bulletin-january-2025) — Official costing anchors. Uses the 2026/27 column: £6.9bn per basic-rate point; £1.6bn higher-rate; £5.35bn employee NI; £11.15bn employer NI; £3.6bn corporation tax (both rates); £8.8bn VAT; £0.24bn per 1% fuel-duty change. The 2026 update was deferred, so these are older latest-available costings. They are frozen without rebasing to subsequent policy changes; large combined changes are extrapolations.
- [CGT rate-only scenario · June 2025, section 13](https://www.gov.uk/government/statistics/direct-effects-of-illustrative-tax-changes/direct-effects-of-illustrative-tax-changes-bulletin-january-2025) — Published behavioural costing. Higher CGT rate +10 percentage points: −£0.540bn / −£2.060bn / −£3.565bn in 2026/27–2028/29, including effects on income tax and stamp duty land tax. The simulator holds the year-three loss constant in years 4–10 as an explicit assumption. No scaling to full equalisation. Other tax changes are added at their standalone costings; interactions are not modelled.
- [Equalising tax rates · August 2025, section 7 and table 1](https://centax.org.uk/wp-content/uploads/2025/09/TaxRateEqualisation-TechnicalNote.pdf) — Research costing with assumed annual timing. £11.3bn additional revenue, excluding further carried-interest reform, with behavioural responses. Includes rate alignment, a normal-return investment allowance, carry-over of gains at death, and arrival/departure reforms. Uses uprated 2019/20 taxpayer data and a 2026/27 policy baseline including October 2024 changes. The simulator applies this yield every year from implementation. That timing is our assumption, not a CenTax annual forecast. CGT rates remain fixed when other income-tax sliders change. Not an HMRC-endorsed or September 2026 updated forecast.
- [Capital gains tax reform (2024), section 7.8](https://ifs.org.uk/publications/capital-gains-tax-reform) — Research on design and uncertainty. Explains why revenue depends on the tax base, behavioural responses, death, emigration and transition rules. Does not substantiate the former £8bn central assumption. The simulator offers a specified 10-point rate rise and a complete reform package; it does not assign a costing to rate equalisation alone.
- [Latest land baseline and land-tax design](https://ifs.org.uk/mirrlees-review) — Official base / assumed tax design. The dated data register links the preliminary ONS £6.9tn land estimate for 2025. Applying assumed 90% taxable coverage and 90% collection produces £55.89bn per rate point. IFS informs design principles; neither ONS nor IFS supplies this revenue forecast. Existing property taxes remain.
- [Options for tax increases (2025)](https://ifs.org.uk/publications/options-tax-increases) — Research. Surveys tax and relief reforms and their trade-offs. Our inheritance package is illustrative: £2bn / £4bn / £6bn at full reform. Our dividend package similarly uses £3bn / £6bn / £9bn, scaled to the gap from current 10.75%/35.75% dividend rates using the original 8.25-point normalisation. This now gives £4.545bn centrally at default income rates.
- [Dynamic scoring of policy measures (2023)](https://articles.obr.uk/dynamic-scoring-of-policy-measures-in-obr-forecasts/index.html) — Modelling reference. Provides a framework for demand multipliers and supply effects. The toy starts with 0.3 for income tax/NI, 0.35 for VAT and 1 for investment, then varies responses. Its ten-year supply, household pass-through and revenue feedback equations are our assumptions, not OBR forecasts.
- [Brexit analysis](https://obr.uk/forecasts-in-depth/the-economy-forecast/brexit-analysis/) — Counterfactual evidence. The OBR assumes a 4% long-run productivity loss relative to remaining in the EU. Rejoining is a different counterfactual. We assume entry in year 3 and a 0% / 2% / 4.2% GDP-level recovery by year 10, with annual net contributions of £18bn / £12bn / £10bn. No accession terms are predicted.
- [UK comparisons · financial year 2026](https://www.gov.uk/government/statistics/uk-comparisons-to-financial-year-2026/uk-comparisons-to-financial-year-2026) — Official stocks / modelled cancellation. UK income-contingent balances total £324.8bn at March 2026. National net repayments sum to £6.0251bn in 2025/26. A £200bn recoverable asset loss and 6% annual runoff remain assumptions. Future loans continue. Cancellation of balances is separate from cash borrowing.
- [Families and households in the UK: 2025](https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/bulletins/familiesandhouseholds/2025) — Official denominator. The denominator is now the published rounded 29.0 million households. GDP uses the sum of the latest four current-price quarters (£3,097.533bn). Both are held fixed as scaling inputs. Household distribution weights are assumptions, not ONS microdata estimates.
- [England 2025/26 · corrected tables](https://assets.publishing.service.gov.uk/media/6a44d1241a04d4dae8b8155e/slcsp012026.xlsx) — Official repayment components. Table 1A, BR27: £5,339.3m HE net repayments. Table 1B, Q24: £46.7m FE net repayments. Values rounded to £0.1m, as presented by SLC. These are repayments posted to accounts, not the provisional repayment-by-earnings-year tables.
- [Wales 2025/26](https://www.gov.uk/government/statistics/student-loans-in-wales-2025-to-2026/student-loans-in-wales-financial-year-2025-26) — Official repayment component. Annual net repayments: £242.6m. Included once in the UK total.
- [Northern Ireland 2025/26](https://www.gov.uk/government/statistics/student-loans-in-northern-ireland-2025-to-2026/student-loans-for-higher-education-in-northern-ireland-financial-year-2025-26) — Official repayment component. Annual net repayments: £186.9m. Included once in the UK total.
- [Scotland 2025/26](https://www.gov.uk/government/statistics/student-loans-in-scotland-2025-to-2026/student-loans-in-scotland-financial-year-2025-26) — Official repayment component. Annual net repayments: £209.6m. Included once in the UK total.