Landfill tax rates increase as part of the Spring Budget


Jeremy Hunt Spring Budget

In the Spring Budget, Chancellor Jeremy Hunt announced the standard rate of Landfill tax will rise to £126.15 per tonne and the lower rate will rise to £4.05 per tonne in 2025-26.

The Landfill tax is charged by weight and there are two rates: standard and lower. Inert or inactive waste is subject to the lower rate.

The Treasury said it is raising the Landfill tax rates for the year 2025-26 to incentivise investment in more sustainable waste management infrastructure. The government said the increase better reflects actual Retail Price Index (RPI).

The current standard rate of Landfill tax is £102.10 per tonne and the lower rate is £3.25 per tonne. From April 2025, the tax will rise to £126.15 per tonne and the lower rate will increase to £4.05 per tonne.

Reacting to the Landfill tax increase, Executive Director of the Environmental Services Association (ESA), Jacob Hayler said: “The Chancellor’s announcement that landfill tax rates will be adjusted to reflect actual RPI will help to ensure waste material does not fall down the hierarchy and will incentivise investment in alternative circular economy infrastructure.

Recent inflation spikes have not been accounted for in determining the rate of landfill tax.

“Recent inflation spikes have not been accounted for in determining the rate of landfill tax, which has eroded the competitiveness of alternative waste treatment and recycling facilities. Today’s budget corrects this calculation and is very much welcomed by the Environmental Services Association.

 “However, correcting Landfill Tax rates – while hugely welcome – was just one-half of ESA’s asks of this budget. To achieve a more sustainable circular economy and decarbonise waste treatment, the UK needs additional fiscal policy measures that don’t just stop waste falling into landfill, but which actively drive material up the waste hierarchy by stimulating market demand for recycled materials. 

“That is why an escalator on the plastic packaging tax, and perhaps a widening of this tax to all forms of packaging, remains a crucial policy instrument for future budgets.”

HMRC statistics showed the total provisional Landfill tax receipts for 2022 to 2023 was £626 million, 6% (£41 million) lower than the previous financial year. The data also showed Landfill tax tonnage declared for the financial year ending 2023 was 22,354 thousand tonnes – 421 thousand tonnes (2%) lower than the previous financial year. 

Last year, Law firm Pinsent Masons said many businesses face investigations, extra tax and penalties because of complex landfill tax rules. The law firm said these extra costs are “potentially worth millions of pounds”.

Reactions to the budget

Landfill tax

Gavin Graveson, Northern Europe Senior Executive Vice President of Veolia, commented: “Almost 60% of UK adults think the Government isn’t doing enough to tackle environmental issues and today we have seen green policies fall off the top agenda again – even though many of them are popular with the electorate and can stimulate economic growth.

“The clean energy transition will be the biggest area for economic growth between now and net zero targets in 2050. Today’s Budget is a missed opportunity to take bigger strides towards decarbonised, local energy to bring down energy bills and carbon emissions.

“The UK needs to back the right horse as we transition to a green economy, where decarbonisation, and circular solutions for materials, will be the foundation.”

Former CIWM President, Dr Adam Read, Chief External Affairs and Sustainability Officer, SUEZ Recycling and Recovery UK, said: “We are deeply disappointed to see the waste and resources sector overlooked once again in today’s Budget. 

“Today represented a real opportunity for the Chancellor to lay the groundwork for the seismic reform needed to make green growth a reality, yet the reality is there was nothing encouraging on offer for the sector from today’s announcements.

“The waste and resources sector underpins green transitions across a number of other industries including manufacturing, agriculture and food and drink. Yet we continue to face challenges due to a lack of clear policy direction from Government. 

“Today was no different. This makes it difficult to deliver the green skills vital to our sector and in turn the skills that we need to deliver the transition to a more circular and resource-efficient UK economy.

“For years, there has been warm enthusiasm for green job policies from both politicians and industries. Today we are once again reminded of the urgent need for concrete action, not just platitudes.

“This challenge presents an opportunity for collaboration between government and industry, and we are committed to playing our part. The sector has a huge amount to contribute to the green agenda but we need others to join us on the journey so we can meet this challenge head-on.”

Today’s Budget did little to shift the dial on investment in green skills and jobs across the UK.

Martin Baxter, Deputy CEO at the Institute of Environmental Management & Assessment, said: “Today’s Budget did little to shift the dial on investment in green skills and jobs across the UK, which we know is critical if we are to meet long-term climate and environmental targets.

“We now await the publication of the government’s Green Jobs Plan later this month and hope that it sets out a clear pathway for greening the UK’s workforce, with the necessary funding and financing considerations baked in.”

Shaun Spiers, Executive Director of Green Alliance, said: “In contrast to the EU and US who are investing at scale in the energy transition, the chancellor has today put short-term political advantage ahead of the investment the UK economy urgently requires. 

“This budget is a missed opportunity to boost productivity, grow the economy and tackle the energy crisis. Tragically, the climate and nature crises have once again been sidelined. The next government must revise the fiscal rules to allow for the long-term investment the country needs. 

“That will be essential if the UK is to have any chance at reclaiming its leadership role on the environment and seizing the economic opportunities of the net zero transition.”

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