Landfill tax rates are due to rise from tomorrow (1 April) – but proposed law changes aimed at giving greater clarity over which materials are exempt from the tax are expected later in the year.
From tomorrow, the standard rate of tax will rise from a current level of £84.40 per tonne to £86.10, and the lower rate from £2.65 per tonne to £2.70 per tonne.
Landfill tax changes are coming into effect
However, proposals to change the definition of ‘taxable disposal’ which had also been expected to come into force tomorrow – detailing exemptions from the landfill tax – are now expected to be approved in summer 2017.
The legal changes are to be brought into law through the Landfill Tax (Disposal of Material) Order 2017, a draft of which was laid before parliament this month – but has yet to receive Royal Assent.
A spokesman for HMRC, confirmed the timetable, stating: “The SI [Statutory Instrument] will come into force shortly after Royal Assent. We don’t have a date for this, but expect it to be sometime in the summer.”
Landfill Tax rates
| Landfill Tax £ per tonne |
From 1 April 2018 | From 1 April 2017 | From 1 April 2016 | From 1 April 2015 | From 1 April 2014 |
| Standard rate | 88.95 | 86.10 | 84.40 | 82.60 | 80 |
| Lower rate | 2.80 | 2.70 | 2.65 | 2.60 | 2.50 |
Prescribed activities
The new definition, which will apply to disposal of waste at landfill sites in England, Wales and Northern Ireland is intended to replace a list of ‘prescribed activities’ which dictate whether a material is subject to landfill tax, but not which activities are exempt from the tax.
At present, operators sending waste to landfill must pay a standard rate of tax, or a lower rate for ‘the least polluting’ material such as fines.
However, there are a number of activities which are considered as not taxable, including using so-called ‘fluff’ and ‘soft waste’ for engineering purposes to cap a landfill cell or in road construction.
Changes to the legislation have been sought due to a number of ongoing challenges to HMRC from landfill operators over which materials can avoid the landfill tax charge.
By introducing secondary legislation – The Landfill Tax Order 2017 – the government is seeking to clarify that the tax applies to all material ‘unless expressly exempt’.
The exemptions include:
–Material that forms a layer which performs the function of drainage at the base of a landfill cell.
–Material that forms the impermeable layer that delimits the landfill cell.
–A pipe, pump or associated infrastructure inserted into a landfill cell for the purpose of the extraction of or control of surplus liquid or gas from or within the cell.
–Material used for restoration of a landfill cell that only contains inert material.
According to an explanatory note, published alongside the revised legislation, the changes will: “…simplify the legislation, bring needed certainty and protect future revenue at risk through litigation. The intention of the changes is to preserve the current scope of the tax.”
The changes were outlined by HMRC in December 2016 (see letsrecycle.com story) having been announced in the Chancellor’s spring budget statement earlier in the year.
Alignment
Sam Corp head of regulation at the Environmental Services Association (ESA) said that the organisation will be closely monitoring the application of the legislation and repeated his call for alignment between regulatory authorities across the UK.
Insertion of landfill gas pipes will come under the new exemption
He said: “It is not a major concern but we will be watching to ensure that there are no unintended consequences of the new regulations, particularly in terms of cross border activities.”
Mr Corp’s comments are particularly relevant due to the impending devolution of landfill tax powers for Welsh sites, which will come under the jurisdiction of the Welsh Government from April 2018. Landfill tax powers have already been devolved to the Scottish Government.
Wales
Wales is currently preparing for the handover of tax powers for a landfill disposals tax and also a land transaction tax which will replace stamp duty. The Welsh Revenue Authority (WRA) will be responsible for collecting these two Welsh taxes.
Wales’ Finance Secretary, Mark Drakeford said: “These new tax powers provide us with the opportunity to reshape and make changes to improve existing taxes to better meet Wales’ needs and priorities. We will use them to help improve fairness and support jobs and economic growth in Wales.
“A huge amount of work is already underway to prepare for these tax powers. We have consulted widely and listened to a range of stakeholders to help us develop these taxes and will continue to do so as they make their way through National Assembly scrutiny.”
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Source: letsrecycle.com Waste Managment
