Landfill Tax could hike costs by 3,050% – here’s what you need to know

At the end of April, the UK Government launched its ‘Consultation on the reform of Landfill Tax’ for England and Northern Ireland (Landfill Tax is a matter for devolved government in Scotland and Wales – one for another day). The tax applies to all waste disposed of by way of landfill, and the existing tax covers both a lower rate of £4.05 per tonne and a standard rate of £126.15 per tonne.

I eagerly awaited the industry’s response to the proposed changes but, three months on, frankly, I am surprised at how muted it has been. Is this a sense of resignation to yet another tax grab? Or is it that the most significant impacts are about five years away, so don’t seem to matter today? Perhaps there has been some blind optimism that the proposed ‘transition to a single rate’ won't result in a huge, potentially viability-wrecking, uplift in disposal costs. And I am sorry to say, it will.

Let us break down the headlines. Currently, about 5 million tonnes of non-hazardous construction and demolition material end up in landfill in England and Wales, which contributes about £20m in tax to HMRC’s coffers. Assuming the transition to a single rate would apply to the same volume, and assuming no behavioural change in the industry, this would see the total tax increase over thirtyfold to about £630m.

Typically, a good workaround has been to engage with the local earthworks contractors who have a quarry that needs backfilling. Such end use of materials was often exempt from landfill tax, saving significant amounts of cash. But the recent proposal considers removing some of the landfill tax exemptions, including the exemption for materials disposed of in quarries with a disposal permit. So, this exemption – despite the legitimacy of material having a required use – may no longer be an option.

For years, as an industry, we have talked about getting planning authorities on board early, as often they drive excess waste disposal through dictating development levels without consideration of what that practically means for development. We have also talked about reducing waste disposal for environmental reasons and for programmatic reasons. But now we have the additional consideration of it costing you over 30 times more money!

The issue is solvable: we can produce less waste. But to make this work as an industry, we must learn to design out excess waste disposal from the start. A key part of the solution is educating the entire construction supply chain, from planners and architects to developers and end-users.

The planners and architects must place landfill waste and the associated tax at the centre of their design considerations. The cost consultants need to take into account the implications and factor it into budget plans. At the same time, developers and end-users also need to understand the evolving policy landscape.

Most importantly, we need to make sure all of this is in action now. Much of what we start to design today won't be built until these changes come into full effect.