Devolution of Landfill Tax to Wales and the 2 year transitional period for the Landfill Communities Fund
Published 7 December 2017
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Who is likely to be affected
Registered landfill operators.
Environmental bodies (EBs), including distributive EBs, approved under the Landfill Communities Fund (LCF) scheme.
General description of the measure
Legislation will be made to amend the Landfill Tax Regulations 1996 so Landfill Tax no longer applies and the LCF closes in Wales.
Policy objective
These changes are being made following the decision to devolve Landfill Tax to Wales from 1 April 2018.
Background to the measure
Landfill Tax will be devolved to Wales from 1 April 2018 and the LCF in Wales will close. EBs may hold unspent funds from contributions by landfill operators located throughout England, Northern Ireland and Wales. Ministers decided that there should be a 2 year transition period, from 1 April 2018 until 31 March 2020, during which these unspent funds can be spent on projects located in England, Northern Ireland and Wales.
Detailed proposal
Operative date
The legislation will take effect from 1 April 2018.
Current law
The rules for the operation of the LCF are laid down in The Landfill Tax Regulations 1996 (Statutory Instrument 1996/1527), regulations 30-36.
Proposed revisions
The Devolution of Landfill Tax (Wales) (Consequential, Transitional and Savings Provisions) Order 2018 amends the Landfill Tax Regulations 1996.
The amendments will:
- restrict landfill operators’ entitlement to credit from 1 April 2018 to qualifying contributions made to an EB for projects that take place in England or Northern Ireland
- enable funds held by EBs at 31 March 2018 to continue to be spent on projects in Wales during the transitional period
- allow funds to be retained at the end of the transitional period if they are to meet the costs of cessation of operations in the future and they are agreed with the regulatory body
- provide the authority to claw back unspent funds held by EBs operating only in Wales at the end of the transitional period
- allow funds remaining at the end of the transitional period to continue being used to pay EBs’ running costs, but only in proportion to costs attributable to carrying out approved objects in England and Northern Ireland
- require UK Landfill Tax to be paid on all disposals up until 31 March 2018 even if it would normally be accounted for at a later date
Summary of impacts
Exchequer impact (£m)
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 |
|---|---|---|---|---|---|
| nil | nil | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact.
Economic impact
The measure is not expected to have any significant economic impact.
Impact on individuals, households and families
This measure has no impact on individuals as it only affects businesses who are registered landfill operators and registered EBs. The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
The government expects that there will be no differential impact on different equality groups.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on 22 businesses who are registered landfill operators operating in Wales.
One-off costs include familiarisation with the new rules and registering with Welsh Revenue Authority (WRA) for sites situated in Wales. Businesses that operate sites in Wales, as well as in England and/or Northern Ireland will need to notify HM Revenue and Customs (HMRC) to remove any Welsh landfill sites from their registration details.
There will also be a one-off cash flow impact for some operators because the new rules require UK Landfill Tax to be paid on all disposals up until 31 March 2018 even if it would normally be accounted for at a later date.
On-going costs are expected to include introducing new systems and / or processes in order to calculate and pay Landfill Tax to the WRA, in addition to reporting and paying Landfill Tax in England and Northern Ireland.
The measure is also expected to have a negligible impact on approximately 6 EBs. One-off costs for these bodies include keeping records to identify contributions deemed to be on hand at 31 March 2018. These contributions must be identified separately from any received after this date as the latter cannot be spent on projects in Wales. It is not expected there will be any on-going costs.
There is no impact on civil society organisations.
Operational impact (£m) (HMRC or other)
There is no impact on HMRC.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This will be monitored though the existing compliance programme for Landfill Tax and as part of the existing arrangements for monitoring the LCF.
Further advice
If you have any questions about this change, please contact Catherine Mawer on Telephone: 03000 585946 or email:Catherine.Mawer@hmrc.gsi.gov.uk.
Declaration
Andrew Jones MP, the Exchequer Secretary has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.