HBF says proposed changes to landfill tax will threaten viability

The Home Builders Federation (HBF) has warned that the government’s proposed changes to the landfill tax could make it harder to hit housing targets and deliver affordable homes. 

The Treasury is currently consulting on the reform of landfill tax in England and Northern Ireland, with the government proposing to introduce a single rate of tax by 2030. 

There are currently two rates of landfill tax: the standard rate of £126.15 per tonne and the lower rate, which broadly applies to inert, less polluting materials, is £4.05 per tonne.  

The government is proposing introducing a single rate and scrapping the lower rate – which would have a significant impact on the housebuilding sector, which currently pays £4.05 to dispose of each tonne of topsoil. 

It has not yet been confirmed if the proposed standard rate would be higher or lower than the current standard rate of £126.15.

The Times suggested in an article published over the weekend that if housebuilders were taxed at the higher rate of £126.15 per tonne it could add £840m to the tax collected by the Treasury, adding that with other exemptions gone, the bill could easily go beyond £1bn. 

The HBF has condemned the proposals – the consultation on which remains open until 21st July – saying it will make Labour’s plans to deliver 1.5m new homes by the end of this parliamentary term even more difficult to achieve.  

David O’Leary, executive director at HBF said: “The viability of new housing delivery has been significantly affected in recent years by a swathe of new taxes on development and additional policy costs imposed by government.”

He added: “The proposed 3,000% increase in Landfill Tax would threaten the viability of even more projects, leading to fewer Affordable Homes and reducing supply overall. We are urging government to think again about this tax that would make its ambitious housing target even more difficult to achieve.” 

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The government proposes creating a single rate of landfill tax by 2030, with an escalator applied to the lower rate from 2027 until it meets the standard rate.

The landfill tax was introduced in October 1996 to encourage the diversion of waste away from landfill and towards more environmentally friendly waste management options. It has been a key driver behind local authority waste to landfill in England falling by 90% since 2000.

The current consultation is part of the government’s bid to “transition to a circular economy”. It says its forthcoming Circular Economy Strategy for England will offer sector-specific roadmaps.

A Treasury spokesperson said: “The consultation on landfill tax reform is still open, no decisions have been made, and we are committed to working with businesses to understand the impacts of the proposals.”

The Ministry of Housing, Communities & Local Government has been contacted for comment.