VAT: landfill tax
The measure
The criteria for determining the lower rate of landfill tax are to be published and HM Treasury will take these into account when listing the materials that qualify for the lower rate.
Who will be affected?
People disposing of waste which currently qualifies for the lower rate of landfill tax, namely inert and inactive waste, will need to be aware that the list of qualifying materials may be changing. Materials that no longer qualify for the lower rate will be subject to the standard rate, potentially increasing tax from £2.50 per tonne to £56 per tonne.
When?
This measure will apply to disposals of waste at landfill sites made on or after 1 April 2011.
This measure was previously announced in the March 2010 Budget with an expected
publication date of an Order by HM Treasury of 1 October 2010. It appears
therefore that this is simply a deferral of the effective date of this measure.
HM Treasury announced in 2009 that it was undertaking a consultation on
'modernising landfill tax' with a view to changing the classification of
materials qualifying for the lower rate. This caused great consternation and
resulted in much lobbying by affected parties. The energy generation sector, for
example, felt they would have suffered a significant and unbudgeted increase in
cost if materials such as ash were to be reclassified.
It is not entirely clear what changes will come about in April 2011 but it is to
be hoped that the Government have taken on board the feedback received in the
consultation and that the list of qualifying materials will be available sooner
rather than later to allow businesses time to respond and prepare.
