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Landfill tax to rise in line with retail price index and funding for waste crime


Chancellor George Osborne has said that landfill tax will rise in line with the retail price index in 2015 and will be reviewed for the future beyond that.

The Chancellor announced in the Budget Document that landfill tax will rise in line with the RPI rounded to the nearest 5 pence from 1 April 2015.

In the Budget document, there was also more information on the situation regarding fines from residual waste.

The document said: “The standard and lower rates of landfill tax will increase in line with the RPI, rounded to the nearest 5 pence from 1 April 2015. Following industry engagement to address compliance, the Government will introduce a loss on ignition testing regime on fines (residual waste from waste processing) from waste transfer stations by April 2015. Only fines below a 10 per cent threshold would be considered eligible for the lower rate.

“Full proposals will be set out in a consultation document later in 2014. The Government intends to provide further longer term certainty about the future of landfill tax rates once the consultation process on testing regime has concluded, but in the meantime is committed to ensuring that the rates are not eroded in real terms.”

Chancellor George Osborne also revealed that surplus funds from the landfill tax communities fund will be used to tackle waste crime.

The document said: “The value of the landfill tax communities fund for 2014-15 will be reduced to £71 million. As a result, the cap on contributions by landfill operators will be amended to 5.1 per cent. This takes account of progress that environmental bodies have made to address the Government’s challenge to reduce unspent funds. The saving will be used to fund an equivalent one-off increase to address waste crime. The Government intends that environmental bodies’ performance against the challenge is published once the final information is available this year.”

Defra has confirmed that this will result in £5 million extra to tackle waste crime in England in 2014-15 and that this will enable Defra and the Environment Agency to do more to ensure effective compliance and enforcement of waste law.

The Budget also revealed that the Government will limit the difference between the carbon price implied by the carbon price floor and the EU allowance to £18 per tonne of CO2 from 2016-17 to 2019-20. However, “fuels used to generate good quality electricity” by combined heat and power plants for onsite purposes from the carbon price floor from 1 April 2015.

In his speech, the Chancellor also announced that energy intensive industries including steel and paper mills would see an extension of the compensation scheme for the cost of the carbon price flaw and EU emissions trading scheme to 2019-2020.

There would also be a new compensation scheme launched to help these energy intensive industries with higher electricity costs resulting from the renewables obligation and small-scale feed in tariffs for renewable generation from 2016-17.

While the Government will also exempt from the carbon price floor, the fuel used in combined heat and power plants for electricity generated to supply manufacturing firms. 

Recycling and energy from waste businesses investing in plant and equipment will also be able to claim up to £500,000 tax relief as a result of a doubling of the annual investment allowance (AIA) from April 2014 to 2015.