The government has announced a significant increase in landfill tax rates, starting from 1st April 2025. The standard rate will increase by 21.6% to £126.15 per tonne, up from £103.70 in previous years. The lower rate, which applies to inert waste such as rocks and concrete, will increase to £4.05 per tonne from £3.30.

Reasons Behind the Increase

The government has stated that this change is “to better reflect actual RPI and ensure the tax continues to incentivise investment in more sustainable waste management infrastructure”. It’s estimated that this increase will raise an additional £50 million in its first year. This marks one of the most significant jumps since the inception of landfill tax.

Alongside the announcement of the substantial uplift for 2025, the government also intends to introduce an automatic annual uplift based on the RPI measure of inflation. This is a significant shift from the previous ad hoc basis of rate changes and suggests a more predictable, but potentially steeper, trajectory for future landfill tax rates.

Impact on the Construction Industry

For the construction industry, which generates 61% of all waste in the UK, this increase poses a considerable financial challenge. The industry accounts for 40% of waste sent to landfill, making it particularly vulnerable to these changes. This does not need to feel like doom and gloom though, the industry can use this as an opportunity to innovate, adapt and improve.

Opportunities for Innovation

The tax increase presents an opportunity for the construction industry to reassess its waste management strategies and explore more sustainable alternatives. Companies are now incentivised to invest in innovative solutions that can reduce waste, increase recycling, and promote a circular economy within the sector.

As the landfill tax increase approaches, companies should consider embracing innovative solutions like our Materials Exchange Platform. Our platform can help businesses optimise material usage, facilitate cost-effective and sustainable material reuse and recycling, and significantly reduce reliance on landfill, contributing to both cost savings and improved sustainability in the face of rising disposal costs.