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    The release, by HM Treasury and HMRC on 2 April 2025, of a came as something of a surprise to many in the waste industry. There had been an earlier ‘call for evidence� back in the spring of 2021 but many believed that attempt to modernise the tax had fizzled out � or at least been put on the backburner for the foreseeable future. The publication of the consultation exercise has given many old Landfill Tax debates new life, however, and there are almost as many views on the proposed reforms as there are landfill sites in the two countries.

    The fact that only two countries within the UK are involved is the product of devolution of the old UK Landfill Tax to Scotland in 2015 and Wales in 2018. At first, the three taxes were essentially on all fours with each other � as you would expect in a small state with land borders (and the potential for ‘waste tourism�) between its constituent parts � but they have already begun to drift apart, certainly in terms of statutory interpretation and more recently in terms of the legislation itself. That creates the first conundrum posed by this consultation: where England and Ireland go first, will Scottish Landfill Tax and the Welsh Landfill Disposals Tax follow? Running three similar but not identical taxes is already hard work for landfill site operators and, given that the UK changes will surely be followed but perhaps not copied wholesale by Revenue Scotland and the Welsh Revenue Authority, there could be further complexities at every level.

    Not just the waste industry

    The proposed changes will not just affect the waste industry. They go much deeper than that and they are intended to do so. The Government considers that its proposals will strengthen and enhance the circular economy model, but many commentators believe that there is a real risk of unintended consequences which will reduce the effectiveness of the tax as a policy tool. They may also erode market consistency and predictability, at least in the short to medium term, and that is of great concern, not only to the majority of waste operators, but also to their customers in industry, in local authorities and other public bodies and to individual consumers who could feel the impact in terms of price rises.

    What are the headline proposals?

    • A single rate by 2030 â€� at present, there are two rates of tax: £4.05 per tonne for qualifying materials and some residual wastes (‘qualifying finesâ€�), and £126.15 per tonne for everything else including household waste. The Government plans to impose an escalator to the lower rate until it reaches the standard rate in 2030. It also plans to abolish the current qualifying fines regime;
    • Disposals at unauthorised waste sites to be taxed at 200 percent of the standard rate â€� this proposal is put forward to deal with increases in fly-tipping that the consultation recognises will occur as a result of moving to a single rate. The difficulty is likely to be in catching the wrongdoers and then getting them to pay;
    • The removal of exemptions for the filling of quarries under a disposal rather than a recovery permit, and for desiccants disposed of with dredged material; and
    • The removal of water discounting from 2027 â€� many manufacturers and others using the current water discounting arrangements believe them to be a fair and sensible way to manage their waste management costs. The Government’s justification is that there has been some abuse of water discounting but legitimate businesses fear that they are being penalised for doing the right thing.

    Some thoughts on the consultation

    It should not be forgotten that Landfill Tax has been a massively successful environmental tax, achieving real and lasting positive changes in terms of reuse and recycling. No taxes are perfect, however, or at least they do not appear to be perfect to everybody. For example, whilst the two (disparate) rates system has undoubtedly driven an increase in recycling it has also created a difficult market for residual waste, the ‘fines� left over from mechanical recycling processes. There are also examples, and many allegations, of waste crime which HMRC and others rightly wish to address, the problem being that the baby might be thrown out with the bathwater if all the subtleties of Landfill Tax, such as exemptions and different rates according to environmental impact, are removed. Effective environmental taxes are not blunt instruments, and respondents to this consultation are likely to be making that very point.

    The closing date for consultation responses is 21 July 2025.

    For further information please contact:

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