Landfill Tax

Green taxes & waste management

The Landfill Tax was introduced by the Conservative government in 1996 and it was the UK's first “green tax” - it is a charge on all waste which is sent to landfill and was introduced as a way of increasing the cost of landfill to make other more environmentally-friendly but also more expensive options look attractive by contrast.

Who pays landfill tax?

The operator of a landfill site is responsible for paying landfill tax although most will include this in the fee that they charge to local authorities and business which therefore pay the tax indirectly.

Calculation of landfill tax

Landfill tax is calculated with reference to the mass of waste which is to be disposed of and whether that waste is classified as “active or “inactive” waste.

• Inactive waste – covers most materials used in building as well as the earth excavated from the foundations. Most concrete, clay, brick, gravel, glass and soil are inactive.
• Active waste – covers all other forms of waste, including woods and plastics.

In the 2010-2011 financial year the tax rates were £48 per tonne for active waste and £2.50 per tonne for inactive waste. However, as part of the government’s drive to further reduce reliance on landfill, it was announced in 2010 that the standard rate of landfill tax would rise by £8 in 2011 and again in each subsequent year until 2014 when it would stand at £80 per tonne. The standard rate would not be decreased below this level until at least 2020.

Decreasing liability for landfill tax

Landfill operators can reduce their liability for landfill tax by making payments to qualifying environmental charities which will then use the money to fund qualifying projects. This can be a complicated area of law and landfill operators looking to reduce their tax liability in this way need to be sure that the charity to which they are paying money falls within the rules of this scheme. This is one area where a specialist tax advisor may be able to assist.