{"id":533464,"date":"2025-11-26T16:26:41","date_gmt":"2025-11-26T16:26:41","guid":{"rendered":"https:\/\/www.constructionnews.co.uk\/?p=533464"},"modified":"2025-11-26T17:14:45","modified_gmt":"2025-11-26T17:14:45","slug":"real-relief-as-government-shies-away-from-single-landfill-tax-rate","status":"publish","type":"post","link":"https:\/\/www.constructionnews.co.uk\/supply-chain\/real-relief-as-government-shies-away-from-single-landfill-tax-rate-26-11-2025\/","title":{"rendered":"Budget 2025: \u2018Real relief\u2019 as government shies away from single landfill tax rate"},"content":{"rendered":"

The construction industry has voiced relief over chancellor Rachel Reeves’ Budget decision to retain two separate landfill tax rates after intensive lobbying.<\/p>\n

The move could save the government\u2019s pledge to build 1.5 million houses, leading figures in the construction sector have said.<\/p>\n

Industry bigwigs said the decision to retain a lower landfill tax for less polluting materials avoids a \u201cruinous policy\u201d which would have dealt a blow to key infrastructure pledges.<\/p>\n

On Wednesday (26 November), the Treasury announced it would not be moving forward with a single rate of landfill tax, following a consultation with industry.<\/p>\n

Instead, it will stick with two rates, one for more polluting materials, and one for less polluting materials.<\/p>\n

The current landfill tax for firms with less polluting landfill is \u00a34.05 per tonne, compared to the standard rate of \u00a3126.15 per tonne.<\/p>\n

The government was considering an increase to the lower rate the level of the standard rate by 2030, to push industry to recycle more rather than using landfill.<\/p>\n

Now, it has elected to stick with two rates to avoid \u201cimpos[ing] unavoidable costs on businesses and [\u2026] undermin[ing] the government\u2019s target of building 1.5 million new homes in England”, it said in the consultation response.<\/p>\n

Instead, it has decided to increase the two rates by the same rate materially, to prevent them from widening too much.<\/p>\n

In 2026\/7, the standard rate will increase with retail price index (RPI) inflation, and the lower rate will increase by the same cash amount as the standard rate, the government announced in Wednesday\u2019s Budget<\/a>.\u00a0Construction News\u00a0<\/em>understands both rates will now increase by \u00a34.60 in 2026\/27, taking the lower rate to \u00a38.65 per tonne.<\/p>\n

The Treasury also retained a tax exemption for backfilling quarries to continue industry’s \u201caccess to a low-cost alternative to landfill\u201d.<\/p>\n

One source at a major contractor said that the Treasury had “avoided shooting itself in the foot” and that upping landfill tax would have killed housebuilding and infrastructure delivery.<\/p>\n

“We were very worried they were going to do it despite warnings,” the source said.<\/p>\n

Civil Engineering Contractors Association (CECA) director of policy and public affairs Ben Goodwin said said increasing the lower rate to match the standard rate could have been \u201cruinous\u201d for the construction industry.<\/p>\n

\u201c[The proposal] would have severely hamstrung the ability of CECA members to deliver projects cost-effectively,\u201d he said.<\/p>\n

\u201cThe decision not to go ahead with such a ruinous policy is a result of listening to industry, and for that we applaud the government, in seeking to build consensus on building a better future for Britain.”<\/p>\n

Rico Wojtulewicz, head of policy and market insight at the National Federation of Builders (NFB), also welcomed the decision, adding the government had \u201creally engaged with industry\u201d on it.<\/p>\n

Though the lower rate will go up, he said it would be \u201cmanageable\u201d and would \u201callow the industry to start preparing for the circular economy\u201d.<\/p>\n

Increasing the lower rate to the level of the standard rate, though, would have \u201ckilled growth\u201d.<\/p>\n

\u201cWe never would have built 1.5 million homes,” he said.<\/p>\n

He also said the decision to retain the exemption on backfilling quarries would prevent the cost of aggregates from increasing further, keeping costs lower on building sites.<\/p>\n

“It would have been a massive problem, which would have reduced the amount of aggregates produced at quarries.”<\/p>\n

Mark Russell, executive director at the Mineral Products\u2019 Association (MPA), called the decision not to converge the two landfill tax rates a \u201creal relief\u201d.<\/p>\n

\u201cThe proposed changes would have had a severe impact on the mineral products industry, with a knock-on effect for the UK economy, construction and nature conservation.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The construction industry has voiced relief over chancellor Rachel Reeves’ Budget decision to retain two separate landfill tax rates after intensive lobbying. The move could save the government\u2019s pledge to build 1.5 million houses, leading figures in the construction sector have said. 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