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Do you still qualify for the lower rate of landfill tax?

On 1st April 2015, the standard rate of landfill tax rose from £80.00 to £82.60 per tonne and the lower rate from £2.50 to £2.60 per tonne in line with inflation. On the same day, loss of ignition (LOI) testing came into force through the Landfill Tax (Qualifying Fines) Order 2015.

This order requires landfill operators to conduct laboratory tests on a 1kg sample every 1,000 or 500 tonnes of trommel fines received from individual processors depending on the risk rating of the producer. In cases when the producer is categorised as high risk every load most be sampled. A producer’s risk rating is assessed via pre-acceptance checks, inspection of the load and the consistency with which the fines pass the LOI test.

The test will enable the operator to determine the level of non-inert material present in the sample with 15% or less being the threshold for the lower rate of landfill tax. From 1st April 2016, the percentage of non-inert rate that is acceptable to quality as inert reduces to 10%. Where the tested waste exceeds the threshold for non-inert material, the waste processor will be required to pay the standard rate of landfill tax for the load and will be liable to more regular testing thereafter.

The LOI regime was brought into effect following the outcry in 2012 when Her Majesty’s Revenue & Customs (HMRC) ruled that, from immediate effect, trommel fines, grit and screenings no longer qualified for the lower rate of landfill tax. Following an industry backlash and a period of consultation, HMRC compromised with LOI testing which has largely been accepted by the waste industry as a way to level the playing fields and ensure that qualifying waste is truly inert.

It should be noted that ‘inert’ in the context of the Landfill Tax regime does not mean that the waste is classified as ‘inert’ as defined by the Landfill (England and Wales) Regulations 2002.

HMRC confirmed last month that the standard rate of landfill tax will be set at £84.40 in 2016 and the lower rate at £2.65 for England, Wales and Northern Ireland. The power to set Scotland’s rate will be devolved to the Scottish Parliament from 2016.