Guidance

Landfill Tax: Landfill Communities Fund scheme

How to claim Landfill Tax credits if you take part in the Landfill Communities Fund (LCF) scheme.

Overview

You can claim Landfill Tax credits if you’re a landfill operator making contributions to local environmental projects that meet the requirements of the LCF scheme.

As part of the LCF scheme you can get tax credits worth 90% of the contribution you make.

The total credit mustn’t exceed that year’s maximum percentage credit and your contribution must be made to an environmental body (EB) that are approved and enrolled with ENTRUST, to be spent on an appoved project.

When to claim tax credits

To claim your credit, you should include it on your Landfill Tax return for the period you made the payment to the EB.

You can also claim for contributions if you made them after the end of the return date but before your deadline for submitting your return.

How much to claim

As you can’t predict your Landfill Tax payments, this is how to work out how much credit you should claim on each return:

Return (1 April to 31 March) Up to the maximum percentage credit of:
First tax return that period’s tax liability
Second tax return first and second periods’ tax liability added together, minus any credit you received on your first return
Third tax return first, second and third periods’ tax liability added together, minus any credit you received on your previous returns
Fourth tax return all periods’ tax liability added together, minus any credit you received on your previous returns

For contributions, the year runs from 1 April to 31 March the following year. If 1 April falls in the middle of your accounting period, you have 2 options to apportion the credit to each year.

You can either work out 2 separate tax credit figures - one for the contributions made before 1 April and one for the contributions made after.

Or you can split the total tax credit claimed by working out what portion of the return period fell before 1 April and what portion after.

For example, if your total tax credit claim is for £250 and 31 days of that claim were before 1 April and 61 days were after 1 April (for a total of 92 days) you would work out the percentage by calculating:

31 ÷ 92 x 100 = 33.7%

Then you would apply that percentage to the tax credit amount:

33.7% of £250 = £84.25

£84.25 would be apportioned to the previous year and the remaining £165.75 to the current year.

Your responsibilities

To qualify for the tax credit you must make sure your contribution only supports an approved project with a written contract with the enrolled EB. You can do this by checking the enrolment number with ENTRUST. Be aware enrolment can be revoked so you should check before you make each contribution. For each payment, you need to record the:

  • amount
  • date
  • name and enrolment number of the EB
  • name and address of any third party contributor
  • amount any third party contributor gives or is expected to give you and the date (actual or expected) you receive these amounts

Your contribution can’t be returned to you or a third party in the same 3-monthly accounting period you paid it.

You must give ENTRUST any third party details, including amounts and dates of payments. You should also supply the enrolment number of the EB their payments are going to. You should also supply the EB with the third party’s name and address.

By taking part in the LCF scheme, you should make yourself aware of the circumstances that can affect your entitlement to tax credits.

Published 15 December 2014