Landfill Tax to increase in line with RPI

Landfill Tax will increase in line with the Retail Prices Index (RPI), rounded to the nearest five pence, from 1 April 2015, according to the heavily criticised Budget 2014.

Introduced in 1996 at just £7 per tonne, Landfill Tax has risen by around £8 every year to deter the practice of sending waste to landfill, encouraging waste to be treated higher up the waste hierarchy instead.

As there was no mention of the future rate of Landfill Tax is last year’s budget, there had been increasing calls to both increase the tax, and, contrastingly, freeze it at its current rate of £72 per tonne.

However, according to the Budget 2014 document, the standard and lower rates of Landfill Tax will increase in line with the RPI (currently between two and three per cent), rounded to the nearest five pence, from 1 April 2015.

According to the Budget, in 2015/16 and 2016/17, the total amount of Landfill Tax and Landfill Communities Fund money being brought in to the Treasury will rise by £5 million, increasing to £10 million in 2017/18 and 2018/19.

The ‘longer-term’ plan for Landfill Tax will reportedly be outlined in a consultation later this year.

The document reads: ‘Following industry engagement to address compliance, the government will introduce a loss on ignition testing regime on fines (residual waste from waste processing) from waste transfer stations by April 2015. Only fines below a 10 per cent threshold would be considered eligible for the lower rate.

‘Full proposals will be set out in a consultation document later in 2014. The government intends to provide further longer-term certainty about the future level of Landfill Tax rates once the consultation process on testing regime has concluded, but in the mean time is committed to ensuring that the rates are not eroded in real terms’.

It seems likely however, that this will largely relate to Landfill Tax in England, as Wales and Scotland are expected to soon have control over their own Landfill Taxes in the near future.

In terms of departmental budgets, the Department for Environment, Food & Rural Affairs (Defra), which is currently responsible for waste and resources, will have £1.6 billion at its disposal in 2015/16, down from £1.8 billion in 2014/15. This budget cut has already led the Resources Minister Dan Rogerson to say that Defra will be ‘stepping back’ from creating new waste policy.

Local authorities could also expect to see further cuts to their budgets in 2015/16 as the Department for Communities and Local Government (DCLG) will see its budget for local government cut from £13.8 billion to £12.1 billion.

Funds to tackle waste crime

The Treasury also outlined that the value of the Landfill Communities Fund for 2014-15 will be reduced to £71 million. As a result, the cap on contributions by landfill operators will be amended to 5.1 per cent.

The document reads: ‘This reduction takes account of progress that environmental bodies have made to address the government’s challenge to reduce unspent funds. The saving will be used to fund an equivalent one-off increase to address waste crime. The government intends that environmental bodies’ performance against the challenge is published once the final information is available later this year’.

In other waste-related announcements, the aggregates levy will remain at £2 per tonne in 2014/15 and legislation will be introduced to suspend elements of the aggregates levy that are ‘subject to a formal state aid investigation by the European Commission’, from 1 April 2014.

The legislation will reportedly make ‘provision for the suspended elements to be reinstated should the Commission decision allow, and to enable revenue received as a result of the suspensions to be repaid where practicable’.


There are bigger announcements for the energy sector, however, with government capping the Carbon Price Support rate at £18 from 2016-17 to 2019-20.

Government has said it will also introduce a new compensation scheme, to help energy-intensive industries (EIIs) with ‘higher electricity costs resulting from the renewables obligation and small-scale feed in tariffs for renewable generation’, from 2016-17.

This package means that EIIs will be compensated for all ‘green levies’ (government policy designed to support low-carbon and renewable investment) up until 2019-20, saving the average EII up to £19 million by 2018-19.

Government has also announced it will exempt fuel used in combined heat and power (CHP) plants (which supply electricity to manufacturing firms) from the Carbon Price Floor.

Taken together, these measures are hoped to ‘ensure that the UK businesses at greatest risk from high energy prices remain competitive and have long-term certainty on energy prices by reducing energy costs for the economy by up to £7 billion by 2018-19’.

New measures include the introduction of a Capacity Market to ‘ensure security of supply via incentivising investment in new gas capacity and getting the best out of existing power plants’.

Final decisions on the Capacity Market design will be announced later today (19 March 2014), ahead of the first capacity auction at the end of the year.

Further, government will also be providing £60 million for ‘new low-carbon innovation to support carbon capture and storage (CCS) technologies that show significant potential to reduce the cost of low-carbon generation in the UK’.

Building a ‘resilient economy’

Osborne tweeted this picture of the new £1 coin with the Budget Box this morning.

Launching the Budget 2014 in the House of Commons today (19 March), Chancellor of the Exchequer George Osborne said he hopes the Budget will help build a ‘resilient economy’.

He said: “I can report today that the economy is continuing to recover, and recovering faster than forecast…

“This is a Budget for building a resilient economy. If you’re a maker, a doer or a saver, this Budget is for you.”

He outlined that the deficit is down by a third (but still almost double what he’d said it would be in 2010), and will be down by half in the coming year.

Indeed, he highlighted that the Office for Budget Responsibility (OBR) estimates that by 2018/19, Britain will no longer have a deficit, but instead a small Budget surplus at 0.2 per cent “but only if we work to the plan”.

Osborne said: “Our economy is growing faster then Germany, faster than Japan, faster than the United States. In fact, there is no major economy in the world that is growing faster than the UK…

“The central mission of this government is to deliver economic security. We’re not promising quick fixes. Instead, we’re taking the next steps in our long-term plan.

“The forecasts I’ve presented show: growth up; jobs up; the deficit down.

“Now we are securing Britain’s economic future with: manufacturing promoted; working rewarded; and saving supported.

“With the help of the British people, we’re turning our country around, we’re building a resilient economy.”

Other announcements from the Budget 2014 include:

  • introducing a new, dodecagon ‘resilient’ £1 coin in 2017 that could help reduce counterfeiting;
  • merging cash and shares ISAs into a single New ISA with annual tax-free savings limit of £15,000 from 1 July;
  • removing all tax restrictions on pensioners' access to their pension pots, ending the requirement to buy an annuity;
  • increasing income tax allowance from £9,440 to £10,000 in April 2014  and then up to £10,500 in 2015;
  • reducing the ceiling for paying 20 per cent income tax from £32,010 of taxable income to £31,865;
  • freezing fuel duties until September 2015;
  • enabling parents in the UK to claim back up to £1,200 a year in childcare costs for each child under the age of five from 2015;
  • waving inheritance tax for those in the emergency services who ‘give their lives protecting us’;
  • building the first new garden city in 'almost 100 years' at Ebbsfleet;
  • doubling annual investment allowance to £500,000, which could be appllicable to 99.8 per cent of business (and will cost an estimated £2 billion); and
  • creating the Alan Turing Institute for data algorithm research.

Next year's Budget, set for March 2015, will be Osborne’s last before the next general election.

Read the full Budget 2014 documentation.