OPINION: Landfill tax has long been a key element of the UK’s strategy to reduce waste sent to landfill and encourage more sustainable disposal practices. Earlier this year, the government launched a consultation on reforming the regime, signalling its intention to simplify the system and tackle waste crime.
The summary of responses published following the Budget reveals a significant shift in approach. Following strong industry feedback, HMRC has decided against many of the most radical proposals, opting instead to work with stakeholders to modernise key aspects of the regime and improve compliance. While this is welcome news for industry, continuing engagement with HMRC will be essential to ensure that future updates remain practical and proportionate.
Initial proposals
The consultation set out ambitious changes aimed at simplifying the regime and reducing opportunities for fraud. Among the headline proposals was the introduction of a single rate of landfill tax by 2030, abolishing the lower rate currently applied to inert materials. This move was intended to remove complexity and prevent misdescription of waste, but it raised concerns about significant cost increases for sectors such as construction and aggregates.
Other proposals included removing the qualifying fines regime from April 2027, ending exemptions for quarry backfilling, stabilisers in dredged material and water discounting, and introducing tougher penalties for unauthorised waste sites.
The government argued these changes would support environmental objectives and strengthen enforcement against waste crime. However, industry warned that disposal costs for certain materials could increase dramatically, creating serious financial and operational challenges.
Industry response and revised position
The consultation drew 383 responses, reflecting widespread concern. Many warned that the proposals would have far-reaching consequences, including steep cost increases, which could make essential activities such as quarry restoration and infrastructure projects financially unviable. Respondents also highlighted the risk of unintended consequences, including a rise in fly-tipping and waste crime if disposal costs escalated sharply.
Specific concerns included the impact on biodiversity commitments, with industry bodies arguing that removing the quarry filling exemption would undermine restoration projects. Operators also pointed to significant cost pressures on infrastructure, warning that disposal costs for common materials could multiply, creating financial strain. It was also argued that higher costs could incentivise illegal dumping and misdescription of waste, undermining the government’s environmental objectives.
In light of this feedback, the government has scaled back its plans. The revised position includes:
- Retention of the two-tier system and rate increase – There will be no move to a single rate by 2030. However, the lower rate will now rise in line with the cash increase of the standard rate. From 1 April 2026, the standard rate will be £130.75 per tonne and the lower rate £8.65 per tonne.
- Continuation of exemptions – Quarry filling and water discounting exemptions remain, but the exemption for stabilisers used in dredged material will be removed from April 2027.
- Modernisation of the qualifying fines regime – Rather than abolishing it, the government will work with industry to improve clarity and compliance.
- No increase of unauthorised site rate – As most other measures have been abandoned, the government is no longer proposing to increase the rate applied to disposals at unauthorised waste sites.
Implications for waste operators
The removal of the most disruptive proposals provides welcome stability to operators. Fears about losing key exemptions, abolishing the qualifying fines regime and adopting a single-rate model have been allayed. Businesses do not need to overhaul pricing structures or prepare for major compliance changes in the short term.
However, the confirmed rate increases mean landfill remains an expensive option, reinforcing the need to divert waste wherever possible. The government’s commitment to modernising the fines regime and reviewing exemptions signals that further changes are likely, alongside tighter enforcement against misdescription and unauthorised sites. For now, the response offers some breathing space, but the sector should stay alert and actively provide input into future updates.
Given the ongoing complexities and the high stakes involved, it is essential for operators to exercise rigorous diligence in their compliance efforts as HMRC’s strict procedural requirements and the cliff-edge nature of the legislation mean that even minor missteps could have serious repercussions.
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