Tax by tax, spend by spend

Landfill tax

This Forecast in-depth page has been updated with information available at the time of the March 2024 Economic and fiscal outlook. We are aware of a technical issue with our tableau charts across the site. Access the data from our March 2024 forecast supporting spreadsheets directly.

Landfill tax applies to all waste disposed at a licensed landfill site, unless the waste is specifically exempt.

We produce forecasts for the devolved landfill taxes as well as UK Government landfill tax. Scottish landfill tax replaced the UK equivalent with effect from April 2015, while landfill disposals tax (LDT) came into effect in Wales from April 2018. For more detail on these taxes please see our Scotland, Wales and Northern Ireland page.

The tax is charged by weight and there are two rates:

  • A lower rate for ‘inactive waste’ (such as rocks or soil): £3.30 per tonne in 2024-25.
  • A standard rate for all other waste: £103.70 per tonne in 2024-25.

Rates are updated by the UK Government annually and come into effect on 1 April each year. The Scottish and Welsh Governments have both so far announced rates that match those set by the UK Government. These taxes are all similar in design and the ONS combines them when recording them in the National Accounts, so we have combined them in our latest forecast.

In 2024-25 we estimate that landfill taxes will raise £0.6 billion. That represents 0.1 per cent of all receipts and is equivalent to roughly £21 per household and 0.02 per cent of national income.

  Forecast methodology

Forecast process

The OBR commissions forecasts of UK Government landfill tax receipts from HM Revenue and Customs.

More detail on Welsh and Scottish landfill taxes is available on the Scotland, Wales and Northern Ireland page of our website, here.

The forecasts start by generating an in-year estimate for receipts in the current year, then use a model to forecast growth in receipts from that starting point. We provide HMRC with economic forecasts that are used to generate the tax forecasts. These are scrutinised in a challenge process that typically involves two rounds of meetings where HMRC analysts present forecasts to the Budget Responsibility Committee and OBR staff. This process allows the BRC to refine the assumptions and judgements that underpin the forecasts before they are published in our Economic and fiscal outlooks (EFOs).

Forecasting models

Landfill tax receipts are estimated by multiplying the total forecast taxable tonnage of waste sent to landfill by the corresponding duty rate.

Standard and lower rate tonnages are modelled separately:

  • Standard rate tonnages are the main driver of the forecast. They are grown in line with adult population projections, with adjustments made for any waste forecast to be recycled, incinerated or exported instead of being sent to landfill.
  • Lower rate tonnages make up a small part of the forecast and are relatively stable. They are assumed to remain flat from the latest outturn tonnage for the duration of the forecast.

Adjustments are made to the receipts forecast to account for any payments made into the Landfill Communities Fund (LCF) – a tax credit scheme that offsets some of the negative impacts of living near a landfill site for affected communities.

Main forecast determinants

The main economic determinants driving our forecasts are those related to:

Main forecast judgements

The most important judgements in our landfill tax forecasts are:

  • In-year estimates – our estimates for landfill tax receipts in the current year are determined by the year-to-date performance of receipts collected by HMRC, Revenue Scotland and the Welsh Revenue Authority, and by indications from HMRC’s internal receipts monitoring. The in-year estimates determine the base year from which we use our models to forecast receipts growth.
  • The underlying trend in tonnages of landfilled waste – trends in the tonnages of waste sent to landfill have several different drivers; for instance, the extent to which waste is recycled, exported or incinerated will affect the residual tonnage of waste sent to landfill. The extent to which these trends will continue is a source of uncertainty for our forecast.

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  Previous forecasts

Landfill tax receipts have fallen short of many of our previous forecasts. This reflects several different issues, such as trends in landfilled waste (e.g. new waste incineration plants being opened earlier than expected), and lower-than-expected RPI inflation in some years, which is used to uprate duty rates each year.

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  Policy measures

Since our first forecast in June 2010, governments have announced a number of policy measures affecting our forecast for UK landfill tax. The original costings for these measures are contained in our policy measures database and were described briefly in the Treasury’s relevant Policy costings document. For measures announced since December 2014, the uncertainty ranking that we assigned to each is set out in a separate database. For those deemed ‘high’ or ‘very high’ uncertainty, the rationale for that ranking was set out in Chapter 3 (previously Annex A) of the relevant EFO.

These UK Government policy costings include:

  • in Budget 2016, additional funding was allocated to HMRC to increase compliance activity across the waste supply chain; and
  • in Autumn Budget 2017, additional funding was allocated to the Environment Agency and HMRC to help them tackle waste crime and reduce the harm caused to legitimate landfill operators. From April 2018, operators of illegal landfill waste sites will also become liable for landfill tax.

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Other taxes