Environmental tax obligations and breaks

Landfill tax

Landfill tax is paid on top of normal landfill fees by businesses and local authorities that want to dispose of waste using a landfill site. It is designed to encourage businesses to produce less waste and to use alternative forms of waste management.

VAT should be charged on the full waste disposal fee, inclusive of the landfill tax.

There are two rates of tax:

• the lower rate - £2.50 per tonne for inactive waste such as rocks and soil
• the standard rate - £40 per tonne from 1 April 2009 and increasing by £8 per tonne each year until at least 2013

Exemptions and tax credits

Waste arising from the following activities is exempt subject to meeting certain conditions:

• some dredging activities
• quarrying and mining
• pet cemeteries
• reclamation of contaminated land

Inactive waste used for landfill restoration and filling quarries is exempt subject to meeting certain conditions.

Landfill operators can apply to have tax-free status for any part of a site that is not used for landfill, but is instead used for:

• recycling waste
• incinerating waste
• sorting waste pending its disposal or transfer
• storing inactive waste for use in landfill restoration
• sorting material to obtain the above

Tax credits are available for waste that landfill operators send:

• for recycling, incineration or reuse
• to another landfill site

Landfill operators may be able to claim a tax credit if a customer does not pay the charges for landfilling taxable waste. The credit covers the amount of landfill tax charged to the customer.

Registration

If you operate a landfill site you must register with HM Revenue & Customs (HMRC) if you intend to accept taxable waste. If you operate a licensed in-house landfill operation, you must also register for landfill tax. In both cases, you must retain evidence proving that any waste you dispose of under the lower tax rate qualifies. You then have to fill out tax returns every three months.

You can read the guide to landfill tax on the HMRC website - Opens in a new window.

The Landfill Communities Fund (LCF) - formerly the Landfill Tax Credit Scheme - enables operators to both claim a tax credit and contribute money to enrolled environmental bodies that carry out environmental improvement projects. Landfill site operators may claim up to 6 per cent credit against their annual landfill tax liability.

Find out about the LCF on the ENTRUST website - Opens in a new window.

There are also commercial benefits to be gained from simply minimising waste. See our guide on how to save money by reducing waste.

Read guidance on environmental regulations for landfill site operators on the NetRegs website - Opens in a new window.

Subjects covered in this guide

• Introduction
• The climate change levy
• Enhanced capital allowances
• Landfill tax
• Vehicle and fuel duty
• Aggregates levy
• Land remediation tax relief
• Here's how we benefitted from using environmental tax breaks

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