All companies in the UK are legally responsible for paying landfill tax, and as of April this year, the fees have increased.
This means that any business owner should be looking to recycle their waste more effectively to avoid paying a fortune.
The following guide will explore the ins and outs of landfill tax, so you can better understand how it affects you and how to keep costs down.
Introduction to Landfill Taxation
Landfill tax is mandatory for the disposal of waste to landfill. Its main objective is to encourage efforts to minimise the amount of waste produced and maximise the use of eco-friendly alternatives to landfill waste management, such as recycling, composting and recovery.
This type of tax is paid on top of normal landfill fees by businesses and local authorities that want to dispose of waste using a landfill site.
Disposal of waste using landfill as a solution is classified as taking place whenever material is discarded and deposited on the surface of the land or under the surface of the land (this includes land covered by water which is above the low water mark of ordinary spring tides).
Whether the materials are placed in a container before they’re is deposited is irrelevant - it is still a disposal subject to tax if the materials are covered with earth or something similar straight away, or if they’re deposited in a hole such as a cavern or mine.
Any landfill site is relevant for the purposes of the tax if it holds a licence or permit authorising disposals in or on it. If waste subject to environmental law is being disposed of at a site without a waste management permit, it is generally illegal and can incur serious penalties.
UK Landfill Charges
Firstly, VAT is charged on a businesses’ full waste disposal fee, inclusive of their landfill tax.
There are two rates of tax:
1. Lower rate: £2.50 per tonne for inactive waste such as rocks and soil.
2. Standard rate: the new fee as from 1 April 2011 is £56 per tonne, and this charge will increase by £8 per tonne every year subsequently until at least 2014.
The UK government is using both legislation and taxes to encourage businesses to get on board with an effective recycling / waste management scheme.
Under the Landfill Directive, the government has specific targets to reduce the amount of biodegradable and municipal waste produced in Britain. These are the reductions targeted for biodegradable municipal waste sent to landfill compared to 1995:
· 2010: 75% reduction
· 2013: 50% reduction
· 2020: 35% reduction.
Exemptions & Tax Credits for Landfill Operators
The good news is that waste arising from certain activities is exempt from landfill tax:
· reclamation of contaminated land
· some dredging activities
· pet cemeteries
· quarrying and mining.
In addition, tax credits can be claimed for waste that landfill operators send for recycling, incineration, reuse or to another landfill site.
Landfill operators are also eligible to claim a tax credit if a customer does not pay the charges for landfilling taxable waste. This type of credit covers the amount of landfill tax charged to the customer.
The Landfill Communities Fund (LCF) - formerly the Landfill Tax Credit Scheme - allows operators to claim both a tax credit and contribute money to enrolled organisations that carry out environmental improvement projects. Landfill site operators can now claim up to 6.2% credit against their annual landfill tax liability.
As mentioned above, all these measures ensure that businesses and landfill operators make strong efforts to find more eco-friendly alternatives to landfill, such as recycling.
How to Businesses Can Reduce Landfill Fees
The easiest and best way for businesses to avoid landfill charges is to reduce the amount of waste they produce by baling, which effectively compacts waste to a fraction of its original size.
Baling machines can be affordably rented if the company budget doesn’t stretch far enough to purchase them outright, They will reduce cardboard and plastic waste by up to 80%. This represents a massive saving when it comes to landfill charges.
In addition, UK legislation requires waste to be pre-treated before being sent to landfill, so . by sorting, baling and recycling, your company will be fully compliant without much fuss.
With landfill tax steadily on the rise combined with a less than positive economic climate, all UK businesses are strongly advised to take action to keep their waste management costs down by becoming more efficient at recycling.
About the Author: George Rebstrum is an adviser on landfill tax for businesses.