In Spring 2025, the Government launched a consultation on overhauling the Landfill Tax regime. The consultation proposed several major changes, including moving to a single tax rate (removing the lower rate), removing certain exemptions and reliefs (such as those for quarry restoration), tightening anti-avoidance and enforcement mechanisms and increasing penalties for unauthorised disposals. Following months of meetings with working groups, trade bodies and extensive responses from across industry, local government and waste-management stakeholders, the Government has backtracked on the landfill tax reforms, at least for now. Here is an update on the Landfill Tax proposals.
Budget outcomes
The Government announced it would not proceed with proposals as consulted (main points below):
- Single rate of tax – proposals to move to a single rate of landfill tax by 2030 were dropped.
- Quarry exemptions – the existing tax exemption for the infilling of certain quarries for restoration was not removed and remains in place.
- Qualifying fines regime – this will remain in place and continue to allow a lower rate of tax for certain lower-risk fines material. HMRC has advised that it will work with the industry to reform the regime to prevent misuse.
Instead of the proposed changes, the Government announced that from April 2026, both landfill tax rates will be adjusted so that the lower rate increases by the same amount as the standard rate, preventing the gap between them from widening (standard rate to £130.75/ tonne, lower rate to £8.65/tonne).
This doubling of the lower rate sends a strong message to industry that landfill absolutely must be the last option. Mike Phillips of the British Aggregates Association commented: “The BAA welcomes the outcome of Landfill Tax at the recent budget, having worked extensively with the industry, suppliers, contractors and house builders. We strongly believe the right decision was made. However, we have committed to work with HMRC & Treasury to further improve material supply through the circular economy, tackling waste crime and traceability and waste coding to ensure a sustainable economy.”
What’s next?
The Government’s 2025 consultation made it very clear that the tax regime needs reform to boost the circular economy, simplify the tax and cut waste crime. While the most controversial proposals from the consultation have been shelved, the language suggests gradual changes, especially in raising the lower rate and revisiting exemptions/ reliefs.
Conclusion
As the regulatory landscape evolves, the pressure on businesses, local authorities and the public will, quite rightly, increase to reduce reliance on landfill and ultimately to adopt a more circular approach to resource and waste management. This is needed but we must walk before we run to avoid wider, catastrophic impacts to the construction industry and ultimately the economy that were recognised during the spring consultation.
To sum up, the overwhelming feeling from industry is one of relief following the Autumn Budget. That said, there’s still more to be done to tackle waste crime and properly support a circular economy. These issues haven’t disappeared, and the sector will be watching closely for the next announcements.
