Even in these times of rising costs, a three thousand percent increase in landfill tax rates is guaranteed to raise widespread alarm.
But that is the minimum proposed increase in the cost of sending inert material 鈥� which includes most construction and demolition waste 鈥� to landfill over the next five years.
Under plans in a government consultation published in April, the current lower rate of 拢4.05 per tonne for inert waste would increase in stages until 2030, when it would be withdrawn entirely, leaving all waste charged at the top rate of 拢126.15 per tonne 鈥� although even that might increase too.
This announcement has caused some understandable alarm in the industry, with questions raised about how such an extra cost might affect other government targets 鈥� such as house-building and infrastructure 鈥� or projects of any kind that have a business case dependent on the 拢4.05 rate remaining available.
Other proposals include the removal, by April 2027, of exemptions for quarry restoration 鈥撀犅� ending the Qualifying Fines regime under which fines used for restoration are eligible for the lower tax, and the withdrawal of landfill tax relief for materials deposited under a Quarries Restoration Order.
Landfill tax was introduced in October 1996 to encourage the diversion of waste from landfill to recycling, re-use and recovery.
According to the government it has worked brilliantly, with the proportion of waste going to landfill in England falling by 90% since 2000.
But even the government has acknowledged that its plans to phase out the lower rate might lead to increased fly-tipping by unscrupulous operators seeking to avoid the higher rate. So it has threatened a 200% tax penalty for unlawfully dumped waste.
How that would be enforced is a matter for conjecture given the losing battle that regulators are already fighting against fly-tippers.
The Department for the Environment, Food & Rural Affairs (Defra) says that in 2023-24 local authorities in England dealt with 1.15m fly-tipping incidents, an increase of 6.0% from the 1.08m reported in 2022-23.
At present, the construction industry has a relatively clean record, with Defra saying 60% of fly-tipping involves household waste and vehicles too small to take any significant amount of construction waste.
Nevertheless, fly-tipping attributed to 鈥檛ipper lorry loads鈥� or larger accounted for 47,000 incidents last year, an increase of 11% from 42,000 in 2022-23. Admittedly this represented only 4.0% of total fly-tipping incidents but at a cost of 拢13.1m for clearance.
While the 拢4.05 per tonne rate remains available it is probably not worth the risk of involvement in criminality to fly-tip. But at 拢126.15, things might look different.
A more pressing concern than fly-tipping for Whitehall is that the lower rate is being abused by people misclassifying waste that should be charged at the higher level, so losing HMRC some 拢100m in the last tax year.
One motive for the government鈥檚 proposal is to plug this gap by removing the differential, while another is to increase recycling by making landfill less attractive and to generally support environmental policies.
The consultation paper states: 鈥淎midst this evolving policy landscape, reform is key to ensuring landfill tax supports our circular economy ambition and is set up for continued success.鈥�
Defra also points to new waste-handling technologies that are not at present viable but would become economic if the lower rate were scrapped.
Responses to a call for evidence four years ago had 鈥渉ighlighted that the current approach of applying landfill tax rates based on material type is outdated and does not fully align with our ambition for a circular economy for all resources,鈥� says the paper.
The consultation goes on to note: 鈥淭hough the drivers of waste crime are complex, there are opportunities for landfill tax reform to address incentives and opportunities to聽聽
聽 misdescribe waste to landfill.鈥�
It cites figures showing what policy makers say is happening with misdescribed waste: the volume of higher-rated waste fell from 24.8m tonnes a year in 2010-11 to 4.4m tonnes in 2023-24 while in the same period the amount of lower-rated waste also fell, but only from 11m tonnes to around 8m tonnes a year. This, the government believes, suggests that some higher-rated waste found its way into the lower category.
Those who will have to grapple with this increase see things differently. The British Aggregates Association (BAA) warns that the proposed changes 鈥渃ould reshape practices in quarry operations, waste disposal and secondary aggregate production鈥�.
The BAA says there would be increased costs for the disposal of fines from processing secondary aggregates derived from inert waste like crushed concrete and subsoils.
It says the removal of the lower tax rate 鈥渋s expected to raise gate fees at compliant landfill sites, posing a substantial burden on reprocessors and end-users鈥�.
Despite the government鈥檚 stated environmental concerns, the BAA notes: 鈥淭he removal of key exemptions may hinder project timelines and compel contractors to adopt less sustainable practices, creating challenges in site restoration and increased costs for site clearance and muck-away services 鈥撀� particularly for critical brownfield development.鈥�
It adds: 鈥淭he impetus to separate and segregate materials such as soils and stones will no longer be advantageous and there is a danger of all waste being mixed together with one rate for all.鈥澛�
John Carlon, BAA director of planning and permitting, says the abolition of the lower rate is 鈥渁 sledgehammer to crack a nut as it is directly related to the misdescription of mixed fines waste as soils and stone.
鈥淥ur sector should not be penalised directly by cost implications imposed when this issue should be enforced by the Environment Agency at materials recycling facilities.鈥�
Rico Wojtulewicz, head of policy and market insight at the National Federation of Builders, says the increase will 鈥渨orry the industry as it comes on top of other tax and regulatory changes and it all adds up to more burdens鈥�.
He says the government appears to think builders can simply recover the cost by increasing prices, ignoring significant cashflow issues: 鈥淚f you build a house you don鈥檛 get any money until it鈥檚 sold. But this tax would have to be paid at a far earlier stage鈥�.
Wojtulewicz suspects the government is hoping that the tax change will encourage the adoption of offsite construction, since that tends to generate less waste than traditional methods do.
The National Federation of Demolition Contractors (NFDC) is also concerned. 鈥淲e recognise the critical role that landfill tax plays in influencing waste disposal behaviours and supporting environmental goals,鈥� it says. 鈥淚t is essential that any reform ensures fair implementation while encouraging further innovation and sustainable practices within the construction and demolition industry.鈥�
Rhodri Williams, technical director at the Home Builders Federation (HBF), is less alarmed by the proposed tax change. 鈥淲hilst the changes pose a serious issue for the broader construction sector, residential house builders have the opportunity to reuse aggregates on site for roads, footpaths, drives etc, so reducing the amount of material that has to go to landfill,鈥� he says.
Jayne Harrold, a partner at accountancy and business services firm S&W, says: 鈥淭he purpose of the changes is to incentivise the reuse and recovery of more material and reduce the amount of fraud that currently takes place.
鈥淯ndoubtedly the additional price signal will mean that treatment processes that are not economically viable will become viable, but there are other challenges to the reuse and recycling of material connected with regulatory restrictions that need to be addressed for the shift to take place.鈥�
Without such changes there would merely be 鈥渁 3,000% tax hike and this is likely to drive increased illegal disposal and fly-tipping鈥�, Harrold says.
鈥淎ny changes need to be phased in over an extended period and coupled with regulatory changes to address the current barriers to recycling and reuse and allow the industry to adapt.鈥�
Barbara Bell, environmental tax specialist at KPMG, says the proposed change comes with 鈥渦nintended consequences鈥�.
She explains: 鈥淚t鈥檚 driven by wanting to reduce waste crime but I fear it will hit those who are doing the right thing while those doing the wrong thing will carry on anyway.
鈥淔or the construction and demolition industry it鈥檚 quite a rapid proposed change from the lower rate to only one rate by 2030 鈥� and that might have increased by then, so it brings a cost that is not in people鈥檚 business plans.
鈥淥ther unintended consequences include fly-tipping. The consultation acknowledges this with a 200% tax level proposed for unlawful dumping but you have to catch the waste criminals first then try to get tax out of them, which they probably won鈥檛 pay.鈥�
Mark Russell, executive director of the Mineral Products Association, says: 鈥漁ur real focus is on the removal of the quarry exemption that allows sites to be restored in line with planning permissions. Our members have returned 80 square kilometres of sites and have 110 square kilometres in the pipeline.鈥�
Russell says planning permissions oblige operators to restore sites and the quarry exemption currently allows them to use soft soils free of all landfill tax 鈥� not even at the lower rate 鈥� bringing a huge cost increase if the higher rate was charged.
There is an alternative regime to the quarry exemption, called the 鈥榬ecovery permit鈥�,聽 but this offers little benefit, says Russell, as these can take up to three years to be granted and no legal path exists to switch from exemptions to permits.
Perhaps the biggest shock to the industry is that the proposed increase seems to have come out of nowhere. It is four years since the initial call for evidence and during the ensuing period it seemed that the government had forgotten the whole thing. Most of the industry will wish it had.
LANDFILL TAX AT A GLANCE
The Landfill Tax was introduced by environment secretary John Gummer (now Lord Deben) in 1996 with the aim of encouraging waste reduction and promoting more environmentally friendly waste management options like recycling and reuse.
It is applied to waste disposed of at licensed landfill sites and currently applies to all waste unless specifically exempt. The tax is charged by weight and at two rates: a standard rate and a lower rate for inert, less polluting materials.
- The aim of the tax is to incentivise waste producers to reduce waste, recycle and recover value from waste rather than sending it to landfill.
- The tax applies to waste disposed of at licensed landfill sites, but also to unauthorised waste sites.
- The government says the landfill tax has been a significant factor in reducing the amount of waste sent to landfill by 90% and encouraging the development of alternative waste management technologies.
- As of April 2025, the standard rate is 拢126.15 per tonne and a lower rate is 拢4.05 per tonne. The government proposes to phase out the lower rate by 2030 with all waste taxed thereafter at the standard (higher) rate.
- In the UK, landfill tax is administered by HM Revenue & Customs (HMRC). Scotland has its own landfill tax (SLfT) which is devolved and administered by Revenue Scotland with support from the Scottish Environment Protection Agency (SEPA).
- Landfill taxes are used in many countries around the world to manage waste and promote sustainability.
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