Changes to Landfill Tax rates from 1 April 2021
Published 3 March 2021
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Who is likely to be affected
Operators of landfill sites in England and Northern Ireland. Businesses registered with HMRC for Landfill Tax.
General description of the measure
As announced at Budget 2020 both the standard and lower rates of Landfill Tax will increase in 2021 in line with the Retail Prices Index (RPI), rounded to the nearest 5 pence.
Policy objective
Landfill Tax is charged on material disposed of at a landfill site or an unauthorised waste site. It encourages efforts to minimise the amount of material produced and the use of non-landfill waste management options, which may include recycling, composting and recovery. Increasing Landfill Tax rates in line with RPI means that Landfill Tax can continue to help the government meet its environmental objectives.
Background to the measure
This measure was announced at Budget 2020.
Landfill Tax was introduced on 1 October 1996 to encourage waste producers and the waste management industry to switch to more sustainable alternatives for disposing of material. There is a lower rate of tax, which applies to less polluting qualifying materials covered by two Treasury Orders, and a standard rate, which applies to all other taxable material disposed of at authorised landfill sites.
Previously, the tax applied across the UK but from 1 April 2015 it was devolved to the Scottish Parliament and Welsh Parliament/ Senedd Cymru from 1 April 2018 in Wales.
Detailed proposal
Operative date
The increases in the standard and lower rates of Landfill Tax in line with RPI will apply to taxable disposals made, or treated as made, at relevant landfill sites and unauthorised waste sites, on or after 1 April 2021. The rate changes will apply in England and Northern Ireland only.
Sites operating without the necessary environmental disposal permit or licence will be liable for Landfill Tax at the standard rate on all material.
Current law
Section 42 of the Finance Act 1996 specifies the rates of Landfill Tax.
Proposed revisions
Legislation will be introduced in Finance Bill 2021 to amend section 42(1)(a) and 42(2) to provide for the new rates of Landfill Tax. The rates being amended, and the new rates will be:
| Material sent to landfill | Rates from 1 April 2020 | Rates from 1 April 2021 |
|---|---|---|
| Standard rated | £94.15 per tonne | £96.70 per tonne |
| Lower rated | £3.00 per tonne | £3.10 per tonne |
Summary of impacts
Exchequer impact (£m)
| 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 |
|---|---|---|---|---|---|
| - | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impact.
Impact on individuals, households and families
This measure is not expected to have a direct impact on individuals or households and is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be equalities impacts in relation to any group sharing protected characteristics.
Impact on business including civil society organisations
The measure is expected to have a negligible impact on approximately 120 waste site operators. Negligible one-off costs will include familiarisation with the change and could involve updating internal systems to reflect the new rate. There are not expected to be any continuing costs.
Customer experience is expected to remain broadly the same as the difference for businesses is a rate change. This measure is not expected to have any impact on civil society organisations.
Operational impact (£m) (HMRC or other)
HMRC will not incur any operational costs implementing this change.
Other impacts
Uprating Landfill Tax by RPI maintains the incentive to minimise the amount of material produced and the use of non-landfill waste management options, which may include recycling, composting and recovery.
Other impacts, including carbon impacts, have been considered and no significant impacts have been identified.
Monitoring and evaluation
This measure will be monitored through receipts and tonnage information collected from tax returns.
We will continue to work with Defra and the Environment Agency on monitoring and evaluation, given their roles and responsibilities in relation to waste policy and regulation.
Further advice
If you have any questions about this change, please contact Alan Jones on Telephone: 03000 552961 or email: alan.jones1@hmrc.gov.uk.