Treasury announces landfill tax to increase 21.6 per cent for 2025/26
Spring budget includes a rise of over 20 per cent in both main and lower-rate of landfill charges, raising an additional £50 million for the public purse each year.
According to HM Treasury, the standard rate of disposing waste in landfill will increase to £126.15 from April 2025, up by £22.45 from 2024’s rate of £103.70. The lower rate of landfill tax (for inert waste such as construction rubble) will also rise from £3.30 to £4.05, representing a 22.7 per cent increase.
In the Spring Budget 2024 policy paper, HM Treasury states: “Landfill tax rates for the year 2025-26 will be adjusted to better reflect actual RPI and ensure the tax continues to incentivise investment in more sustainable waste management infrastructure.”
Annual increases are indeed traditionally linked to the national retail price index (RPI). However, in recent months this has sat at around 5 per cent, having fallen from a high point of 14.2 per cent in October 2022.
The table below shows the landfill tax rates for 2025 which have been announced in today’s Budget.
LANDFILL TAX RATES
source: HM Treasury
Material sent to landfill | From 1 April 2023 | From 1 April 2024 | From 1 April 2025 |
---|---|---|---|
Coverage | England and Northern Ireland | England and Northern Ireland | England and Northern Ireland |
Standard rated (per tonne) | £102.10 | £103.70 | £126.15 |
Lower rated | £3.25 | £3.30 | £4.05 |
Respecting the waste hierarchy
Executive Director of the Environmental Services Association (ESA), Jacob Hayler said: “The Chancellor’s announcement that landfill tax rates will be adjusted to reflect actual RPI will help to ensure waste material does not fall down the hierarchy and will incentivise investment in alternative circular economy infrastructure.
"Recent inflation spikes have not been accounted for in determining the rate of landfill tax, which has eroded the competitiveness of alternative waste treatment and recycling facilities. Today’s budget corrects this calculation and is very much welcomed by the Environmental Services Association.
"However, correcting Landfill Tax rates – while hugely welcome - was just one half of ESA’s asks of this budget. To achieve a more sustainable circular economy and decarbonise waste treatment, the UK needs additional fiscal policy measures that don’t just stop waste falling into landfill, but which actively drive material up the waste hierarchy by stimulating market demand for recycled materials. That is why an escalator on the plastic packaging tax, and perhaps a widening of this tax to all forms of packaging, remains a crucial policy instrument for future budgets.”
Impacts of landfill tax 2025
The aim of increasing the landfill tax will be to drive waste reduction behaviour, but as we see whether the strategy will bear fruit, the hike will certainly impact waste management costs across the board. All sectors of the waste management industry will be affected, including local authorities with stretched council finances. The 22 per cent increase for the lower rate will hit the construction sector in particular.
Alongside increased waste charges, the new landfill tax will provide further scope for energy from waste (EfW) charges to increase. As the main alternative to landfill, the increased costs associated with disposal through landfill will give EfW operators some headroom to increase their charges as well.
Mike Maudsley, CEO of UK energy from waste firm enfinium, commented: “Today’s adjustment to the Landfill Tax is a welcome intervention by the Government and will help ensure that unrecyclable waste is diverted away from climate damaging landfill and used instead to create reliable homegrown energy.”
The origins of the Landfill Tax
The landfill tax was introduced in 1996 at just £7 per tonne and initially rose by around £8 each year. In 2014, the Government announced that landfill tax rises would be made in line with RPI, which the Bank of England tries to keep to 2 per cent.