The Welsh Government is consulting on proposed changes to the criteria for the lower rate of Landfill Disposals Tax (LDT). This consultation seeks public input on refining the list of qualifying materials to ensure the lower rate is applied only to wastes that pose a lower environmental risk.
Current Rates of Landfill Disposals Tax in Wales
As of 2024, the current rates for Landfill Disposals Tax in Wales are:
- Standard Rate: £102.10 per tonne
- Lower Rate: £3.25 per tonne
- Unauthorised Disposals Rate: £153.15 per tonne
The revenue generated from Landfill Disposal Tax in Wales is detailed in Welsh Tax Outlook December 2023. Interesting there is no mention of amount of money generated from the Unauthorised Disposal Rate but there is this comment “the Welsh Revenue Authority (WRA) began issuing notices to potential taxpayers in 2021-22, and in 2022-23 they successfully charged their first two cases to the LDT unauthorised disposals rate of tax”.
It would be interesting to see more information on this whether this is an effective deterrent? Is this something for Revenue Scotland / HMRC to consider as a further deterrent to waste crime?
Proposed Changes
The consultation document outlines three options for the lower rate of Landfill Disposals Tax (LDT). These options aim to refine the criteria for materials eligible for the lower tax rate, ensuring alignment with environmental goals. Here are the three options:
Option 1: No Change
Description: Maintain the current list of materials eligible for the lower rate of LDT without any changes.
Implications: This option would continue to apply the lower tax rate to the existing list of materials, providing stability for businesses but potentially missing opportunities to better align the tax with environmental sustainability goals.
Option 2: Update the List Based on Environmental Risk
Description: Review and update the list of materials eligible for the lower rate based on their environmental risk, ensuring that only materials with minimal environmental impact qualify.
Implications: This option would refine the lower rate criteria to better reflect current understanding of environmental impacts, potentially excluding some materials currently eligible and including others that are deemed lower risk. It would encourage businesses to manage waste more sustainably.
Option 3: Introduce a Qualitative Assessment
Description: Implement a qualitative assessment process for determining eligibility for the lower rate, allowing for more flexibility and case-by-case evaluations.
Implications: This option would allow for a more nuanced approach, considering the specific circumstances and potential environmental impact of each waste type. It could increase administrative complexity but provide a tailored application of the lower rate. The key proposals involve:
- Reviewing and potentially updating the list of materials eligible for the lower rate.
- Ensuring that the lower rate applies only to waste types with minimal environmental impacts.
- Gathering feedback from stakeholders to inform the final criteria for the lower rate.
Implications of the Proposed Changes
- Environmental Impact: By refining the criteria, the Welsh Government aims to encourage more sustainable waste management practices, promoting recycling and reduction of environmentally harmful waste.
- Financial Impact on Businesses: Businesses dealing with landfill disposal may face changes in disposal costs depending on the reclassification of materials. Some businesses might see increased costs if certain wastes are no longer eligible for the lower rate.
- Administrative Changes: Waste management companies may need to adjust their processes to comply with new classifications, potentially leading to initial administrative adjustments.
- Incentivizing Better Practices: The adjustments could incentivize businesses to find more sustainable ways to handle waste to benefit from the lower tax rate.
Cross-Border Movement of Waste
- Potential Shifts in Disposal Locations: Differences in landfill tax rates between Wales and England could lead to increased cross-border movement of waste. Businesses might seek to dispose of waste in regions with lower tax rates, potentially impacting local waste management facilities and tax revenues.
- Regulatory Challenges: Increased cross-border waste movement could pose regulatory challenges, requiring enhanced coordination between authorities in different regions to monitor and manage waste flows effectively.
Benefits to Inert Waste Recycling Facilities
- Encouragement of Recycling: Refining the lower rate criteria to include only specific, less harmful wastes can incentivize businesses to recycle inert waste rather than dispose of it in landfills. This could increase the demand for inert waste recycling facilities.
- Market Growth: Recycling facilities specializing in inert waste could see growth opportunities as businesses seek cost-effective and environmentally friendly disposal methods.
- Environmental Benefits: Increased recycling of inert waste contributes to reduced landfill use, conservation of natural resources, and lower carbon emissions, aligning with broader environmental sustainability goals.
The Welsh Government’s objective is to ensure that the tax structure supports environmental sustainability while maintaining fair and effective waste management practices.
For more details and to participate in the consultation, visit the Welsh Government’s consultation page and submit your comments by 15 September 2024
We would love to hear your thoughts on the consultation and whether Revenue Scotland and HMRC should be following a similar path?
If you have any questions, please get in touch with us:
Phone: 01292 610428