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How does landfill tax work and what discounts are available?
Landfill tax explained
As the name suggests, landfill tax is a tax charged on waste disposed of:
- On a landfill site or
- Elsewhere illegally or
- Without an appropriate environmental permit
It is a devolved tax so there are separate regimes applicable to businesses in England and Northern Ireland, Scotland and Wales.
Landfill tax rates
There are two rates of landfill tax:
- The lower rate of £3.30 per tonne on certain inert materials such as soil, brick and concrete
- The standard rate of £103.70 per tonne on everything else
All illegal or unauthorised disposals are subject to the standard rate of landfill tax, except in Wales where an additional 50% is added.
The rates increase annually to account for inflation.
Landfill tax water discount
Businesses that generate waste with added water can claim a landfill tax water discount on materials sent for disposal if they obtain a water discount agreement from HMRC, Revenue Scotland or the Welsh Revenue Authority. You can apply for a water discount if water has been:
- Added to waste to allow it to be transported for disposal
- Used for the extraction of minerals
- Added during an industrial process and the water content is 25% or more by weight
Once your application has been received and approved, HMRC will issue an agreement that states the percentage of landfill tax discount you will receive. The agreement will contain several conditions you have to comply with.
You will then need to provide your landfill site operator with the details of the water discount and they will apply it to the amount of landfill tax due, subject to the agreement.
Water discounts can be extremely valuable for some industrial processes.
Support with landfill tax
Evelyn Partners LLP is a proud member of the Environmental Services Association (ESA) which is the leading trade association representing the UK’s resource and waste management industry.
At Evelyn Partners, we can help you with all aspects of landfill tax, including applying for and claiming landfill tax water discount. Our experts have extensive experience in dealing with landfill tax and can deploy a range of tactics to ensure that you pay the right amount of tax. From tax authority enquiries, assessments, and disputes to appeals to the tax tribunal, we can help.
Frequently asked questions about landfill tax
When was landfill tax introduced?
Landfill tax was introduced in October 1996.
It was brought in by the UK Government to attempt to get businesses who produce a substantial amount of waste to adopt a more environmentally sustainable approach to waste disposal.
What is illegal disposals tax?
If HMRC, Revenue Scotland or the Welsh Revenue Authority find that waste has been disposed of outside of an authorised landfill site, they can charge landfill tax on the illegal disposal.
This can happen inadvertently. For example, if material has been stored for longer than planned, or if material deposited during a redevelopment contains something different to what was originally intended.
Everyone in the disposal chain (including the landowner) can be held jointly and severally liable for the tax assessed on the illegal disposal.
What materials qualify for the lower rate of landfill tax?
Subject to meeting certain conditions, the lower rate of tax is only available for:
- Qualifying materials listed in the Landfill Tax (Qualifying Material) Order 2011 (and it’s Scottish and Welsh equivalents), and
- Qualifying fines or mixtures of fines, which are particles that arise from the mechanical processing of waste
The intention is that only material with low pollution potential qualifies for the lower rate of tax. There are prescriptive requirements governing the amount of contamination that is present and the evidence and testing required for qualifying fines.