Scotland consults on Landfill Tax details

The Scottish Government has today (16 May) launched a consultation into draft subordinate Landfill Tax legislation to ensure it operates ‘effectively and efficiently’ in Scotland.

Scottish Landfill Tax will replace UK Landfill Tax in Scotland from 1 April 2015. The Landfill Tax (Scotland) Act 2014 was given Royal Assent on 21 January 2014, and it has been suggested that a new authority, Revenue Scotland, will be set up to administer the Scottish Landfill Tax and pay money received in the exercise of its functions into the ‘Scottish Consolidated Fund’ (subject to the Revenue Scotland and Tax Powers Bill (TSTP Bill) receiving approval in Parliament). 

All material entering a landfill site will be taxable provided it is not subject to a tax exemption, stored in a non-disposal area, or used in the final restoration of a site according with the site permit.

The consultation launched today is now calling on stakeholders to answer questions relating to how the tax is handled – details of which are listed below.

Scottish Landfill Tax rates

Although the tax rates are yet to be announced (it is expected that they will be revealed as part of the draft Budget process for 2015-16), the consultation outlines that the Scottish Government intends to introduce the tax at ‘rates no lower than those for UK Landfill Tax at April 2015’ (which will increase in line with inflation).

Scottish Landfill Tax will also maintain two rates of tax when introduced: a lower rate that applies to less polluting (or damaging) wastes (as currently applies to UK Landfill Tax); and a standard rate that applies to all other taxable waste disposals.

The consultation document outlines that this is to provide a ‘stabilising factor for the industry in the short term’, but also states that ministers will be undertaking further ‘engagement with industry and investigatory work’ after the implementation of the devolved tax ‘to examine the possibility of additional rates and materials contained within the rates’.

All landfill site activities that are taxable will also remain the same as those for UK Landfill Tax.

SEPA and local authorities exempt from tax in clean-up operations

The consultation also asks stakeholders whether they agree with the proposal to allow Landfill Tax exemptions to the Scottish Environment Protection Agency (SEPA) and local authorities if they need to clear and restore sites as a result of illegal dumping or the insolvency of a landfill site operator.

This will only occur if the administrator or landfill site operator cannot cover the costs of disposal themselves.

Weighing waste

Like UK Landfill Tax, the Scottish equivalent will also require waste to be weighed before being landfilled.

This will usually be by way of a weighbridge either on site or at a nearby location. Where one is not available, the local tax authority will need to be applied to to arrange alternative weighing methods.

The draft regulations allow Revenue Scotland to ‘specify and alter’ the detail of how material is weighed (by means of guidance) to ‘allow future technological developments to be employed’ and ‘reduce the possibility of any misuse of the system’.

Water to be discounted

Unlike UK Landfill Tax, the Scottish version proposes counting water in the weighing process.

According to the Scottish Government, the process of encouraging water to be discounted from waste going to landfill ‘allows for excess water to be allowed into the landfill mass’, which in turn ‘adds to the generation of leachate and creates a further pollution risk’.

It adds that the discounting process can be quite complex and open to abuse/evasion, so it is proposing that water should ‘not be regarded as a discountable constituent’, and will thus encourage de-watering to take place.

Other proposals in the consultation include:

  • setting up a Scottish Landfill Communities Fund (SLCF) to replace the UK fund from April 2015 and financing it through a tax credit system (and increasing the tax credit limit by 10 per cent over the UK LCF at introduction – approximately £450,000 more each year);
  • extending the LCF so that projects that are either 10 miles away from a landfill site or a waste transfer station can apply;
  • reducing the ‘administrative burden’ on landfill site operators where possible by, for example, using online systems to align environmental reporting requirements with Landfill Tax returns and reporting; and
  • aligning the Pollution Prevention and Control (PPC) permit and Landfill Tax returns dates so that they are both submitted at the end of every quarter and can be paid up to 30 days after filing.

All responses to the consultation must be received by 31 July.

Read the consultation documentor find out more about Scottish Landfill Tax.