Concept

Tax-benefit microsimulation models are used to:

  1. Analyse income distribution and its components, for the whole population or individual profiles
  2. Analyse work incentives and disincentives provided by the tax-benefit system
  3. Answer “what if” questions about the effects of tax and benefit reforms on household incomes, work incentives and government budget.

Such analysis is regularly performed for Budget and other Government policy announcements and is also highly relevant for the design of alternative reforms and new policy instruments.

The two short videos below describe what tax-benefit models are, and the genesis of the UKMOD project, back in 2018.

What is tax-benefit microsimulation?

What is UKMOD?

Why use UKMOD?

Key strengths of the model include:

  • The only truly accessible model for the UK
  • Comparability with the EUROMOD EU-27 model
  • Highly flexible policy settings
  • Intuitive user interface
  • Special-purpose tax-benefit modelling language
  • Extensive library of policies
  • Continually updated and developed

How does UKMOD work?

UKMOD applies user-defined tax and benefit policy rules to harmonised microdata on individuals and households, calculates the effects of these rules on household income, and then outputs results – still at the micro level.

Two users interfaces are available for download. A detailed user interface, through which users can modify all parameters of the tax-benefit system and also devise entirely new policies, for all policy years and for all input datasets, and a simplified interface, labelled UKMOD Light, which uses intuitive web forms to allow changing some key parameters and assumptions of the model, for the UK as a whole or in each of the four constituent nations. Both the full and the light interfaces produce micro output datasets, and also output a range of summary statistics, including (changes to) risk-of-poverty and income inequality and the (net) budgetary cost of policy changes.

UKMOD Explore, an online user interface, is also available and produces detailed aggregate statistics comparing user-defined reforms with the legislation.

How is UKMOD different from other tax-benefit models?

Other tax-benefit models exist for the UK:

  • Some are developed within government departments (e.g. PSM, by the Department of Work and Pensions, and IGOTM, by the Treasury) and are not accessible to outside users.
  • Some are developed by research institutions (e.g. TAXSIM, by the Institute for Fiscal Studies) and are not accessible to outside users.
  • Some are developed by research institutions (e.g. the IPPR model, by the Policy Evaluation and Research Unit at Manchester Metropolitan University) and are only accessible under a paywall.
  • Some are developed by think tanks (e.g. Policy Engine), but they are provided without the input data.

UKMOD is the only tax-benefit model for the UK and its devolved nations provided with dedicated software, constantly updated input data, and detailed documentation, all freely available for download.

UKMOD allows combination of a wide range of policy years with a wide range of historical data. This permits answering questions like “What would have been the impact of anticipating a future reform in the past?” or “What would have been the impact if a specific policy was not changed?”