Autumn Statement Confirms 5% Flexibility On Meeting Lower Landfill Tax Rate

For the year commencing April 2015 trommel fines will only have to produce a loss on ignition (LOI) of 15 percent, rather than 10 percent, giving waste operators five percent flexibility on meeting a lower rate of landfill tax. 

George Osborne’s Autumn Statement confirmed that fines produced from waste processed at mechanical treatment plants will be subject to LOI testing to determine their biological content from 1 April 2015 and that Government will reform the Landfill Communities Fund.

The Government announced in the Budget 2014 that it will introduce an LOI test by April 2015.

The lower rate of landfill tax will apply where fines meet an LOI threshold of 10 percent or less. (See CIWM Journal Online Story)

This will help determine whether landfill site operators should be taxed the lower rate for “less polluting” waste, or higher.

“Only qualifying fines below a 10 percent threshold will be considered eligible for the lower rate, though there will be a 12 month transitional period where the threshold will be 15 percent”

The Autumn Statement sets out the next stage of the government’s long-term economic plan and was announced in Parliament by Chancellor of the Exchequer George Osborne.

The Treasury statement read: “Following consultation, the government will introduce a loss on ignition testing regime on fines produced from the processing of waste at mechanical treatment plants from 1 April 2015.

“Only qualifying fines below a 10 percent threshold will be considered eligible for the lower rate, though there will be a 12 month transitional period where the threshold will be 15 percent.”

The Treasury also confirmed its commitment to reforming the Landfill Communities Fund to ensure that funding reaches community projects more efficiently.

The Landfill Communities Fund was introduced alongside the Landfill Tax in 1996 and allows landfill site operators to claim a credit against their landfill tax liability for voluntary contributions made directly to environmental bodies.

Environmental bodies then use these contributions to fund a variety of projects such as maintenance or improvement of public amenities and conservation of species or habitats.

The Fund has provided £1.2bn in total funds for community projects since 1996 but figures show that environmental bodies accumulated large amounts of unspent money and that money was not reaching communities as quickly as it should.

The government challenged environmental bodies to reduce the amount of unspent funds by 15 percent by April 2012, which was extended to 25 percent by April 2014.

Figures released earlier this year revealed that overall environmental bodies have not met the government’s challenge to reduce their unspent funds by 25 percent by April 2014, with funds only being reduced by 17 percent. (See CIWM Journal Online story)

Industry Reaction

The Environmental Services Association (ESA), the trade association for the UK’s resource and waste management industry, welcomed the news.

ESA’s Head of Regulation, Sam Corp, said: “ESA is pleased that a line in the sand has finally been drawn, and that all operators now have a definitive date to work to comply with the LOI testing requirement.

“The LOI requirement will mean that for the first time there will be an objective testing regime in place which will enable HMRC to crack down on misclassification of waste fines and provide a level playing field for all operators.

“Whilst ESA would have preferred the 10% limit to commence straight way, the twelve month transition from 15% down to 10% will at least give some companies with ‘borderline’ compliant fines, the opportunity to modify their processes to meet the new standard.

ESA – “It is important to remember that robust enforcement by HMRC will be required to ensure that the new system works and is not abused”

“It is important to remember that robust enforcement by HMRC will be required to ensure that the new system works and is not abused.”

Nick Molho, Executive Director of the Aldersgate Group said: Today’s Autumn Statement showed clearly that the UK is in need of an investment push to pursue its economic recovery.

“Green infrastructure provides an ideal opportunity to do this given its potential to boost GDP growth, increase employment levels and household income whilst improving the UK’s environmental performance.

“A clear programme of investment into energy efficiency, low carbon and other forms of green infrastructure, should be at the core of the next government’s economic policy.

“The Chancellor’s support for post graduate students is welcome but this needs to form part of a broader agenda to equip our workforce with the skills it needs to seize the employment growth opportunities offered by the low carbon sector.”

Kristian Dales, FCC Environment’s sales and marketing director, said: “The waste and resource management sector needs consistency if it is going to contribute to the growth of the economy and increase jobs – the main aspirations of the Chancellor’s speech.

“Consistent legislation and regulations will encourage investment in the sector, particularly for much-needed infrastructure, and deliver market growth. It’s up to waste and resource management companies to work with the existing legislative framework and regulations to drive up recycling and energy recovery rates. Too much intervention from the Government would distort the market, stifle competition and damage the viability of the industry.

“Further cuts in public spending, mentioned by the Chancellor, will no doubt affect municipal waste collections and put even more pressure on local authorities to provide a reliable service as well as increase recycling rates. This is of particular concern with the recent news of England’s stagnating recycling rate. The waste management industry has a vital role to play in helping local authorities put in place a user-friendly system of collections which is cost-effective and will boost recycling levels.”

CIWM Says

Responding to the Chancellor’s Autumn Statement, the Chartered Institution of Wastes Management (CIWM) has expressed disappointment.

“Green growth didn’t really get a look in today as the Chancellor focused on investment in roads and the NHS,” says CIWM chief executive Steve Lee.

Steve Lee – “Our government appears to be blind to the growing body of evidence and opinion that green growth offers real, long terms benefits to the economy including jobs, improved business competitiveness, and resource resilience and security”

“This government has certainly not lived up to its ‘greenest government’ promise. Rather than measures to shore up confidence in its commitment to a greener, lower carbon, and more energy and resource efficient economy, all we can expect is further cuts to the government departments responsible for this important agenda. The ever tightening squeeze on public sector spending will also inevitably hit local waste services, further threatening the UK’s progress towards the 2020 recycling target.”

“Just three days ago, environment ministers from 11 EU Member States wrote to the European Commission to voice support for the Circular Economy package and there has been positive support too from major industry groups who recognise the economic imperative. Yet our government appears to be blind to the growing body of evidence and opinion that green growth offers real, long terms benefits to the economy including jobs, improved business competitiveness, and resource resilience and security.

“With the political pressures facing the government in the run up to the election, it would be naïve to think that the agenda will change. We can only hope that when the dust settles next June, we have a government that is capable of setting genuine long-term policy goals to create a more circular, decarbonised economy.”


 

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