Landfill Tax hike could slow development

A recent announcement in the Spring Budget that Landfill tax will rise, whilst a positive step towards continue to support the Government’s environmental objectives, could inadvertently also slow development, says commercial property specialist Prop-Search.

The Landfill tax is an economic measure to drive waste streams up the waste hierarchy to avoid the environmental consequences of landfill emissions and is charged by weight: standard and lower.  Chancellor Jermey Hunt has announced that the standard rate of Landfill tax is set to rise in April 2025 from £103.70 per tonne to £126.15 per tonne and the lower rate will rise from £3.30 per tonne to £4.05 per tonne.  

This increase, whilst sharp, has been welcomed by many in the waste industry as it will ensure the UK continues to encourage a more sustainable approach to waste management.  And the realignment of landfill tax with RPI, which was the original intention of this policy mechanism, supports the waste hierarchy by encouraging recycling and recovery of resources.

Simon Toseland, a Director of Prop-Search, said: “Of course, this move is likely to promote the rise of items such as incinerator bottom ash and air pollution control further up the waste hierarchy, however the same cannot be said of materials such as clay and subsoils, otherwise known as inactive soils.  And herein lies a problem.”

“In the construction sector, the development of a site often requires the removal of inactive soils to allow for the new development.  It is not always the case that a developer will find a use for this material within the confines of their site, meaning it must be removed.”

The rise in cost caused by increasing the lower rate of Landfill Tax has the potential to function as a deterrent to regenerating brownfield sites and result in the loss of significant development value for developers – or that this cost is passed on to the land owner, vendor or end-user.  

Simon Toseland concludes: By failing to take the uses of inactive soils into account, the Government has overlooked something which may support its environmental objectives: the regeneration and redevelopment of brownfield sites and the filling of former landfills, giving them a new lease of life or improving biodiverse landscapes – positively contributing through economic, social and ecological value.”