You are here: Home / News / Budget 2016: Landfill Tax Decisions & Packaging Targets

Budget 2016: Landfill Tax Decisions & Packaging Targets

Chancellor George Osborne set out the Treasury’s latest financial plan for the UK in the Spring Budget last week. Whilst measures to tackle waste crime and a reduction to packaging recycling targets have been welcomed, a lack of support for renewable energy has been criticised.

The cuts to the Landfill Communities Fund, announced in the Chancellor’s spending review back in November, were confirmed in the Budget. The LCF is a tax credit scheme that enables operators of the landfill sites to contribute to environmental community projects.

The value of the fund has been lowered to £39.3million for 2016/17, with a cap on contributions by landfill operators of 4.2 per cent from 1 April 2016.

The government reconsidered proposals to remove third party contributions to the LCF, following concerns that waste management companies could face costs of as much as £500,000 a year to support the scheme. Landfill operators will, however, be required to contribute more to the fund from April 2016.

The Chancellor has increased both the standard and lower rates of landfill tax for waste disposed at landfill. The standard rate of landfill tax is due to rise to £84.40 per tonne next month, and is expected to be £86.10 per tonne in 2017 and £88.95 per tonne in 2018. HMRC will consult later this year on the definition of a taxable landfill disposal, with the intention of changing the definition in the Finance Bill 2017.

The treasury also confirmed that an additional £3.2m will be provided over the next five years to HMRC to tackle tax evasion and non-compliance across the waste supply chain.

The Budget proposals also confirmed expected changes to the packaging recycling targets for plastic and glass.

The Chancellor announced that the current target of 52% for plastic packaging recycling for 2016 will be reduced to 49%, increasing 2% each year to 2020, as anticipated. The target had been due to increase to 57% in 2017 but following concerns raised in a report that baseline data used to measure the UK’s progress to meeting its EU packaging targets was incorrect and the high target was unnecessarily increasing costs, a Department for Environment, Food and Rural Affairs (Defra) consultation last year proposed to amend both the plastics and glass packaging targets.

Chris Taylor, Clarity Environmental Commercial Manager, said the reduction is welcomed by many in the industry, allowing a continued easing of plastic prices: “Despite huge volatility in the recovered plastic market last year, falling oil prices and a slowdown in the Chinese economy, plastic over-performed in the last quarter of 2015 and defied all expectations by exceeding its target. The announcement that the target will be dropped to 49% is welcome news for the plastics recycling sector, which should enable us to comfortably meet the target without placing any additional cost burden on producers and providing more time for the industry to review the system.”

On glass, the existing target of 77% will be maintained until 2017, and will then increase by 1% each year to 2020, when it will reach 80%.

The government hopes that changes to both the glass and packaging targets will reduce the burden on businesses.

Despite calls from the anaerobic digestion (AD) sector for greater investment in renewable technology, research and innovation, there has been criticism of the government’s lack of support for the sector.

With the UK producing 14.8m tonnes of food waste per year, the Renewable Energy Association has said investment into more renewable energy sources would have been a welcome addition. Dr. Nina Skorupska CBE, Chief Executive of the Renewable Energy Association said: “The direction for this government is becoming increasing clear, with a huge tax cut for Oil and Gas with the most polluting industries continuing to be protected, but a tax raise for renewable generators through the now thoroughly misnamed Climate Change Levy.

“The removal of the supplementary charge for oil and gas industry amounts to a £1bn giveaway, added on top of the subsidies planned for nuclear, gas and diesel this year, all whilst renewables are getting continually squeezed and blocked.

“Less than three months after the Government heralded the signing of the Paris agreement, we see more support for fossil fuels and protection for polluters. If the government are serious about their national and international commitments they need to back up the empty rhetoric with real actions.”

Related News & Views