UK landfill tax consultation unveils major potential reforms: how will this impact the waste, construction and quarrying sectors?

The landfill tax is an environmental tax designed to encourage waste reduction and is charged on waste disposed of at authorised landfill sites, as well as waste disposed of illegally or without a valid permit.

There are two rates: a lower rate for qualifying inert materials, and a standard rate for other waste. Exemptions and reliefs apply in limited circumstances.

In April 2025 the government launched a consultation on reform of landfill tax, which aimed to streamline the tax system to minimise errors and non-compliance, and increase efforts in tackling waste-related crime. In this article, we outline the proposed reforms from the consultation and how these might impact the waste, construction and quarrying sectors. We also set out immediate steps that businesses can take to manage risk and identify savings ahead of legislative changes.

The proposed reforms

The government consultation proposed significant reforms to the landfill tax regime in England. These changes are touted to discourage landfill use and promote sustainable waste management.

Key proposals:

• Apply an escalator to the lower rate of landfill tax until it reaches standard rate by 2030.
• Remove the qualifying fines regime from April 2027.
• Remove the quarries exemption from April 2027.
• Restrict the exemption for dredgings to just dredged material from April 2027.
• Remove water discounts from April 2027.
• Increase the rate for illegal disposals to 200% of the standard rate and amend penalties and interest.

How might this impact your business?

The proposals will have significant cost implications particularly in the waste, construction and quarrying sectors and may undermine a number of currently economically viable schemes. For waste that is not sent to landfill there will be consequential price increases as landfill tax effectively sets the market price for waste disposal.

The additional price signal will mean that treatment processes that are not currently economically viable will become viable, but there are other challenges to the reuse and recycling of material connected with regulatory restrictions that need to be addressed for the shift to take place.

Other issues that are delaying brownfield development

The proposed reforms to landfill tax are against a background of other reforms and issues that are delaying brownfield development, including:

• Proposed reforms to environmental permitting, in particular in relation to storage, disposal of waste, may help streamline the permitting process but are currently installing some uncertainties in project planning. 
• Very long delays in the Environment Agency’s deposit for recovery (DfR) permitting process, previously six to eight months typical. 
• CL:AIRE Definition of Waste Code of Practice (DoWCoP) – CL:AIRE stands for Contaminated Land: Applications in Real Environments. It''s a registered charity that offers an alternative to obtaining an environmental permit. When a CL:AIRE scheme is utilised, there is no requirement for an environmental permit and can unlock some of the current environmental permitting delays. However, the Environment Agency is continuing to have concerns over the wording of the DoWCoP and enforcement, enforced by the charity CL:AIRE, and this is resulting in some projects being delayed. There is a proposal for the DoWCoP to be amended to satisfy the Environment Agency’s concerns and unblock the delays, but this won’t be before the end of this year.

Steps to prepare

Now is a good time to fully assess the potential financial impact of the proposed reforms on your business. That should include a legal assessment of the extent to which the proposed reforms may trigger change in law provisions in waste supply contracts and construction contracts. That may result a significant increase in costs and require negotiating amendments to existing contracts and sourcing alternative suppliers and alternative waste management options.

Taking proactive steps now can help manage risk and identify savings ahead of legislative changes.

How can we help?

If you would like help understanding the proposed changes, assessing the impact on your business, or preparing your response to the consultation please contact Paul Collins or Mark Manning.