The government has invited fresh evidence on the economic consequences of the reforms, giving industry until 19 September 2025 to respond.
The review follows a consultation launched in April 2025, which suggested scrapping exemptions and reduced rates of the landfill tax.
Lower rate could be scrapped over waste crime concerns
In the consultation, the Treasury proposed abolishing the lower rate entirely and restricting exemptions.
The move was prompted by EA concerns over waste crime, particularly the alleged misclassification of waste to secure the lower rate.
The EA highlighted issues with Loss on Ignition (LOI) testing, the process used to determine whether waste qualifies as inert. It warned that poor compliance with LOI testing allowed operators to avoid paying the full tax.
Under the proposed reforms, all waste would be charged at the standard rate of tax, effectively removing the distinction between inert and non-inert materials.
Costs for construction rise by 3000%
The consultation has been met with significant trepidation from the industry, with some – particularly the construction industry – sharing concerns that their costs could increase up to 3000%.
David Gudgeon, Head of External Affairs at Reconomy Connect, commented: “This latest move by Government to change the lower rate of landfill tax was always going to be difficult for the construction sector to absorb, especially at a time when businesses are facing well documented cost headwinds and are under pressure to protect margins and the bottom line.”
FCC Environment warned in August 2025 that proposed reforms to landfill tax could have unintended negative side effects.
Several people, including the United Resource Operators Consortium (UROC), have also claimed that the EA’s fears of waste classification fraud are based on “anecdotal evidence” that does not reflect the reality of the situation.
The group expressed further concerns that many in the industry have spent the last decade since the introduction of LOI testing investing in the necessary technology, much of which would now be made redundant.
Landfill tax has been ‘effective lever’
The landfill tax was first introduced in 1996 to encourage a shift away from reliance on landfill towards recycling and recovery.
Initially, the tax was charged at a flat rate of £7 per tonne, with a lower rate of £2 per tonne for inert materials such as soil and rocks.
In 1999, the government introduced a “landfill tax escalator,” which steadily raised charges year-on-year. Today, the standard rate is at £126.15 per tonne, while the lower rate for inert waste is £4.05 per tonne.
Gudgeon added: “Landfill tax has long been an effective lever for successive governments to help transition the UK away from a linear economy and towards a more circular one.
“In our view, the most effective way to mitigate cost pressures associated with waste is for businesses to double down on circularity.
“By optimising resources, recirculating materials back into use, minimising waste and diverting it away from landfill, this can help lower costs while also lowering carbon footprints.”
Register for free to comment