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Guidance

Forthcoming change: discount rate changes in TAG

Updated 5 November 2026

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This publication is available at https://www.gov.uk/government/publications/forthcoming-changes-and-previous-versions-of-tag/forthcoming-change-discount-rate-changes-in-tag

Description: changes to the discount rate 

Unit: TAG unit A1.1 (cost-benefit analysis), A3 (environmental impact appraisal), A4.1 (social impact appraisal), TAG data book, worksheets, appraisal software 

Change announced: November 2026 

Expected release Date: December 2026

Description

We are updating the discount rate used in transport analysis guidance (TAG) in line with HM Treasury’s (HMT’s) response to the Green Book discount rate review.

Detail

Changes to the discount rate 

HMT has responded to the recommendations of the Green Book discount rate review. TAG will be updated to reflect the accepted recommendations. In particular: 

  • the discount rate for years 1 to 30 is reduced from 3.50% to 3.00% 
  • the discount rate for years 31 to 75 is reduced from 3.00% to 2.50% 
  • the discount rate for years 76 to 125 is reduced from 2.50% to 2.25% 
  • the Green Book no longer recommends the use of the health discount rate of 1.50%. Instead, the value of future real health effects should be uprated by 2% per annum over time. This leads to mathematically equivalent appraisals of health effects compared to adopting a health discount rate of 1% (declining to 0.5% in year 31 and 0.25% in year 76)
  • the Green Book supplementary guidance on discounting no longer recommends using sensitivity analysis to test how an assumption of pure time preference of zero might affect the results of an appraisal 
  • the calculation of net present values is limited to the first 125 years of the appraisal 

We will update TAG unit A1.1 (cost-benefit analysis), TAG unit A3 (environmental impact appraisal), TAG unit A4.1 (social impact appraisal) the TAG data book, worksheets and appraisal software to reflect these changes.

Contact

For further information on this guidance update, please contact:

Transport Appraisal and Strategic Modelling (TASM) Division
Department for Transport
First floor, Great Minster House
33 Horseferry Road
London
SW1P 4DR

tasm@dft.gov.uk

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