Landfill Tax

Are you affected?
Summary
Landfill Tax increases
Statistics
Landfill Communities Fund
Further information

Are you affected?

Every waste producer whose waste ends up in landfill will be incurring costs due to the government's landfill tax.

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Summary

The Landfill Tax was introduced in 1996 by the Treasury as an environmental tax to help reduce the amount of waste going to landfill. At the time, there was a claim that it would not lead to an increase in costs for industry as NI was reduced at the same time, but it has since become disconnected from that argument and has steadily risen as an incentive to try to reduce landfill and encourage recycling.

The Tax is split into two bands. A lower band is applied to inert waste that contains no biodegradable material, whicst all other general waste has the standard band applied. Certain wastes are exempt - dredgings from inland waterways and harbours, contaminated land under certain circumstances, waste from mining and quarrying and waste that is used for engineering purposes on a landfill site amongst others. The full list can be found in para 4 here.

Landfill Tax is common around Europe, but rates vary hugely. A 2010 survey can be found here.

Landfill Tax increases

The Standard Rate Landfill tax rises each year on an escalator that is set by the Chancellor in his Budget. On 24th March 2010, the Chancellor stated that the escalator would continue at £8/tonne until 2014 with a floor beyond that date that would not allow it to drop below that level. The inert rate is has not been changed.

The table shows the two rates of tax from when they started in 1996 to 2014. In each year, these change to the rate shown on 1 April.

Statistics

Since January 1998, the Treasury has received £9.5bn in tax receipts of which £1bn has been paid to Environmental Bodies.

However, tonnages have been dropping over the years, especially since the £8/tonne increase came in for the first time in 2008. The table below shows annual tonnages since 1999. 

The graph below shows the quarterly tonnages since Q1 2004 showing that in 2011, the standard rate tonnage is likely to drop by 20% over 2010 to around 20m tonnes.

On average, a 1100 litre wheely bin of waste weighs approximately 65kgs. This will mean that if it all goes to landfill, HMRC - who administer the tax - will collect £3.64 at the current rate of £56/tonne or £5.20 per bin in 2014 when the tax reaches £80/tonne.
 

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Landfill Communities Fund

When the tax started, landfill operators were allowed to use 20% for environmental good causes, enabling thousands of local and national projects to be funded to increase recycling, improve the built environment and aid R&D. A few years back, the government decided to change this by allocating part of the fund themselves to specific causes - WRAP, for instance - to provide a more foicussed approach. The percentage available to landfill operators has dropped to 6.6% which in 2008, will be arouond £66m. Enrolled bodies have to be registered through Entrust to apply for this money although the criteria for application is now fairly limited.
 

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Further information

HMRC

Landfill Tax Data

List of Registered Landfill sites

Entrust

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