The latest budget announcement from Chancellor Jeremy Hunt has confirmed a significant increase in the standard rate of landfill tax to £126.15 for the fiscal year 2025/26, with the lower rate also rising to £4.05 per tonne. This decision, revealed in the spring budget, aims to accurately reflect the Retail Price Index (RPI) and encourage investment in sustainable waste management infrastructure.
Current Tax Rates
- Standard Rate: £103.70
- Lower Rate: £3.30
Today’s 21.6% surge in the standard rate marks a notable contrast to the minimal adjustments seen in the previous year, where it only rose by £1.60 per tonne despite RPI exceeding 10%.
Financial Impact Projection
- Expected additional revenue of £50 million for the Treasury in 2025/26.
- Anticipated further revenue increase of £45 million in 2028/29.
While welcomed in parts of the waste sector, the rise in landfill tax will have repercussions across various segments.
Sector-wide Implications
- Some local authorities, such as Cumbria and Essex, which still rely on landfill as a disposal method, will face unwelcome news with a 20% surge in disposal costs.However, Essex is actively seeking a contractor to transition away from landfill practices.
- For the energy-from-waste sector, grappling with increased operating expenses due to inflation, the rise could accelerate the shift away from landfill.
- Rising costs for materials such as ammonia, essential for stack cleaning processes, further compound operational challenges.
The significant increase in landfill tax underscores the importance of embracing sustainable waste management practices. Moreover, it emphasises the crucial role of efficient waste collection systems in reducing reliance on landfill and promoting environmental sustainability.
