Treasury and HMRC invited views on proposals to remove the lower rate of landfill tax in a consultation that closed in July 2025. The LGA’s response asks for a longer trajectory to phase out the lower rate or for the lower rate to be replaced by an intermediate rate. This would help councils manage any additional costs in the context of other financial pressures. We also note the risk of increased fly-tipping.
Treasury and HMRC propose removing the lower rate of landfill tax (£4.03 per tonne for inert materials such as rocks and soil) by 2030. An escalator will be applied to the lower rate until it reaches the level of the standard rate (currently £126.15 per tonne).
The consultation recognises the huge achievement by local government in reducing the amount of waste sent to landfill by 90% since 2000. Local government is rightly proud of this achievement. While the use of landfill is much reduced it remains part of the waste disposal landscape. The provision of waste disposal infrastructure such as energy from waste plants is not evenly spread across England, leaving some councils without practical alternative to landfill. Waste disposal contracts run over many years and may contain minimum tonnage clauses. Trying to break or amend contracts could result in significant financial penalties for councils.
Landfill may also be needed on a short-term basis, for example after severe flooding that destroys the contents of homes and make them unsuitable for reuse or repair. Landfill may also be used to cover gaps in planned maintenance for energy from waste facilities.
The LGA is working closely with Defra to understand the cost pressures facing local government in meeting the expectations of residents for good quality services, and the implementation of government reforms to services. The LGA estimates that the extension of the carbon emissions trading scheme could cost councils as much as £747 million in 2028, rising to £1.1 billion in 2036, with a total cost over this period as high as £6.5 billion. The introduction of the Deposit Return Scheme in 2027 could result in a net cost to local authorities of almost £70 million a year, due to lost income from material sold into the market according to our research. These cost pressures are set against the context of complying with new regulation on the disposal of soft furnishings containing POPs, and meeting the requirements for collection set out in the simpler recycling reforms.
A further other consideration for local government is the risk of increased fly-tipping by removing the lower rate of landfill tax. The kind of inert material that falls into the lower band is often found in builders rubble and other fly-tipped construction waste. Higher landfill tax is likely to make fly-tipping more attractive or encourage businesses to pass their waste into the household waste stream at HWRCs, transferring the cost to council taxpayers.
It is a bad time to expose local government to further cost increases without sufficient time to plan for them. Government should set a longer trajectory for phasing out the lower rate (extending the deadline to 2035 or 2040) or consider switching from a low rate to an intermediate rate of landfill tax, as Localis has proposed following consultation with the waste industry.
The consultation paper asks for views on the potential to divert inert waste like rocks and soil from landfill into reuse, reducing the pressure on natural resources. While this is not directly within the role of local government we are keen to move towards a circular economy and explore the leadership role that local government can play.
The indirect impact of landfill tax on other prices
Research for the LGA by Valpak on the impact of the deposit return scheme on local authorities considered trends on the cost of waste route as part of the cost modelling process. Valpak’s research will be published shortly and is available on request. While there is no formal link between the two pricing systems, the trends suggest that energy from waste gate fees are influenced by the total cost of landfill gate fees and tax, and landfill tax seems to be having an impact on market behaviour.
While not part of this consultation we recommend that government takes action to understand the wider impact of landfill tax, and the forthcoming extension of the carbon emissions trading scheme on pricing and market behaviour. The LGA would be happy to support this.