diff --git a/src/policyengine/utils/parametric_reforms.py b/src/policyengine/utils/parametric_reforms.py
index 7d7a869a..7548ea7e 100644
--- a/src/policyengine/utils/parametric_reforms.py
+++ b/src/policyengine/utils/parametric_reforms.py
@@ -34,6 +34,18 @@ def modifier(simulation):
                 start=start_period,
                 stop=stop_period,
             )
+
+        # Clear caches so calculations use updated parameter values
+        simulation.tax_benefit_system.reset_parameter_caches()
+
+        # Clear computed variable caches (but preserve input variables)
+        # Variables with formulas are computed; those without are inputs
+        for population in simulation.populations.values():
+            for var_name, holder in population._holders.items():
+                variable = simulation.tax_benefit_system.get_variable(var_name)
+                if variable.formulas:  # Only clear computed variables
+                    holder.delete_arrays()
+
         return simulation
 
     return modifier
diff --git a/tests/test_parametric_reforms.py b/tests/test_parametric_reforms.py
new file mode 100644
index 00000000..bc8f9d70
--- /dev/null
+++ b/tests/test_parametric_reforms.py
@@ -0,0 +1,68 @@
+"""Test that parameter reforms are applied correctly."""
+
+from datetime import datetime
+
+from policyengine.core.policy import ParameterValue as PEParameterValue
+from policyengine.core.policy import Policy as PEPolicy
+from policyengine.tax_benefit_models.uk import uk_latest
+from policyengine.tax_benefit_models.uk.analysis import (
+    UKHouseholdInput,
+    calculate_household_impact,
+)
+
+
+def test_parameter_reform_affects_calculation():
+    """Test that modifying a parameter actually changes the calculation result."""
+    param_lookup = {p.name: p for p in uk_latest.parameters}
+    pe_param = param_lookup["gov.dwp.universal_credit.standard_allowance.amount.SINGLE_OLD"]
+
+    pe_input = UKHouseholdInput(
+        people=[{"age": 30, "employment_income": 0}],
+        benunit={},
+        household={},
+        year=2026,
+    )
+
+    # Baseline
+    baseline = calculate_household_impact(pe_input, policy=None)
+    baseline_uc = baseline.benunit[0]["universal_credit"]
+
+    # Reform - increase standard allowance
+    pv = PEParameterValue(
+        parameter=pe_param,
+        value=533.0,
+        start_date=datetime(2026, 1, 1),
+        end_date=None,
+    )
+    policy = PEPolicy(name="Test", description="Test", parameter_values=[pv])
+    reform = calculate_household_impact(pe_input, policy=policy)
+    reform_uc = reform.benunit[0]["universal_credit"]
+
+    # UC should increase
+    assert reform_uc > baseline_uc
+    assert abs(reform_uc - 533 * 12) < 1
+
+
+def test_parameter_reform_preserves_inputs():
+    """Test that input variables are preserved when applying a reform."""
+    param_lookup = {p.name: p for p in uk_latest.parameters}
+    pe_param = param_lookup["gov.dwp.universal_credit.standard_allowance.amount.SINGLE_OLD"]
+
+    pe_input = UKHouseholdInput(
+        people=[{"age": 30, "employment_income": 5000}],
+        benunit={},
+        household={},
+        year=2026,
+    )
+
+    pv = PEParameterValue(
+        parameter=pe_param,
+        value=533.0,
+        start_date=datetime(2026, 1, 1),
+        end_date=None,
+    )
+    policy = PEPolicy(name="Test", description="Test", parameter_values=[pv])
+    reform = calculate_household_impact(pe_input, policy=policy)
+
+    assert reform.person[0]["employment_income"] == 5000
+    assert reform.person[0]["age"] == 30