Landfill tax was introduced in August 1996 by the Finance Act 1996 (‘FA 1996’) and applies throughout the UK. It is principally designed to divert waste from landfills by increasing the cost of landfill as a waste disposal option. The further details of the regime are set out in the Landfill Tax Regulations 1996 (SI 1996 No 1527) (as amended), the Landfill Tax (Qualifying Materials) Order 1996 (SI 1996 No 1528) and the Landfill Tax (Contaminated Land) Order 1996 (SI 1996 No 1529). HM Revenue and Customs has also published a series of informal guidance notes on aspects of the landfill tax. The most recent edition of its general guide to landfill tax was published in July 2010, updating the September 2009 edition. The September 2009 edition updated the May 2004 edition to take account of changes in the law, most notably relating to the tax liability of material used on landfill sites.
The current rate of tax (i.e. from 1 April 2012) is £64 per tonne and this will increase by £8 per tonne in April 2013. ‘Inert’ waste is charged at £2.50 per tonne. The tax is payable by the landfill site operator but is usually passed back to the disposers of waste.
There are a number of exemptions from the liability to pay the landfill tax (contained in FA 1996, sections 43–45 as amended). The Landfill Tax Regulations 1996 (SI 1996 No 1527), Part VII also provides for a landfill tax credit scheme (known as the ‘Landfill Communities Fund’) under which landfill operators liable to pay tax under the FA 1996 instead make payments to environmental bodies registered with ENTRUST, the regulatory body set up to oversee the scheme. The scheme currently enables landfill site operators to donate up to 6.0% of their landfill tax liability to environmental projects in return for a 90% tax credit. These projects must conform to one of the ‘approved objects’ listed in the Landfill Tax Regulations 1996.