Who is likely to be affected
Operators of landfill sites in England and Northern Ireland. Businesses registered with HM Revenue and Customs (HMRC) for Landfill Tax.
General description of the measure
As announced at Spring Budget 2021 both the standard and lower rates of Landfill Tax will increase from 1 April 2022 in line with the Retail Prices Index (RPI), rounded to the nearest 5 pence.
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 Spring Budget 2021.
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 HM Treasury Orders, and a standard rate, which applies to all other taxable material disposed of at authorised landfill sites. Landfill tax was devolved to Scotland in 2015 and to Wales in 2018.
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, from 1 April 2022. 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.
Section 42 of the Finance Act 1996 specifies the rates of Landfill Tax.
Legislation will be introduced in Finance Bill 2021-22 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 2021||Rates from 1 April 2022|
Summary of impacts
Exchequer impact (£m)
|2021 to 2022||2022 to 2023||2023 to 2024||2024 to 2025||2025 to 2026||2026 to 2027|
This measure is not expected to have an Exchequer impact.
This measure is not expected to have any significant economic impacts.
The terms used in this section are defined in line with the Office for Budget Responsibility’s indirect effects process. This will apply where, for example, a measure affects inflation or growth. You can request further details regarding this measure at the email address listed below.
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.
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 and is not expected to increase business customer costs significantly. 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. This measure is expected overall to have no impact on businesses experience of dealing with HMRC as the change is the expected annual uprating of Landfill Tax and doesn’t change any processes or tax administration obligations. 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.
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 to monitor this measure, given their roles and responsibilities in relation to waste policy and regulation.
If you have any questions about this change, please contact Alan Jones on Telephone: 03000 552961 or email: email@example.com