The amendment means that for one year from April 2015, trommel fines will only have to produce a loss on ignition (LOI) of 15% in order to meet the lower £2.50 rate of tax, rather than the standard 10% threshold thereafter.
The announcement came during Chancellor George Osborne’s Autumn Statement, following weeks of meetings between government and industry over how the new LOI regime will be implemented.
Under plans announced in the Chancellor’s spring Budget, LOI testing was put forward as a way of deciding whether a waste material should qualify for a lower or standard rate of tax – which is due to rise to £82.60 per tonne from April 2015.
LOI
LOI involves heating waste in laboratory conditions to establish how much mass is lost. At the time of the Budget, it was announced any load containing trommel fines must produce an LOI of 10% or less to be considered for the lower rate.
However, the United Resource Operators Consortium (UROC) – a trade association for skip hire operators – challenged the prediction that waste operators would be able to meet the 10% threshold at a panel debate with Her Majesty’s Revenue & Customs in July (see letsrecycle.com story).
The proposal put forward by UROC – to raise the threshold to 15% for the first year of the LOI regime in order to give operators to purchase additional processing plant equipment – was understood to have been rejected by HMRC.
Consultation
However, today’s announcement indicates the government has come on board with proposals put forward by skip hire operators voiced in a public consultation that ran until September 2014 (see letsrecycle.com story).
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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% threshold will be considered eligible for the lower rate, though there will be a 12 month transitional period where the threshold will be 15%.”
The revelation on LOI came as one of few announcements relating to the waste sector in this year’s Autumn Statement.
Communities
Among the other details outlined in today’s Autumn Statement, the Treasury reiterated its commitment to overhaul 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.
As part of the government’s unspent funds challenge it is due to consult on options for reform to the system, however as yet no date for the launch of the consultation has been set.
The Treasury also revealed that it is working with the Scottish Government to agree the terms of a grant adjustment in relation as it prepares to hand over control of Landfill Tax north of the border from April 2015.
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