In October 1996 the Finance Act 1996 ushered in the landfill tax at a lowly standard rate of £7.00 per tonne for active waste (compared with today’s prices of £21.00 per tonne from 1/4/06) and £2.00 per tonne for inactive waste, which remains the same. Although the tax was introduced before Mr. Brown took occupation of No.11 he has welcomed the extra revenue for the treasury with open arms by introducing an escalator which will see the tax rise to £35.00 per tonne by 2011 and reducing the amount that can be taken as landfill tax credits from 20% to 6.7%. There is no doubt that the tax has driven waste away from landfill and encouraged (or forced?) investment in recycling to separate active from inactive waste. Whilst most people in the waste business are aware of the tax there are still a number of myths and misconceptions doing the rounds almost 10 years later, which I shall concentrate on below.
I am often asked the difference between the two tax bands and whether or not inactive waste means inert. Inactive waste is a much broader classification than inert waste and therefore alien to the normal waste definitions we know from the Environmental Protection Act 1990 and the EC Landfill Directive. The Landfill Tax (Qualifying Material) Order 1996 identifies 9 groupings of waste which can be classified as inactive, summarised as follows:
Group 1 Rocks and soils (including topsoil, peat, silt and dredgings).
Group 2 Ceramic or concrete materials (excluding glass-reinforced plastic).
Group 3 Minerals , including moulding sands, mineral absorbents, man-made mineral
fibres, silica, mica, mineral abrasives (including made mineral fibres such as
glass fibres, but not asbestos).
Group 4 Furnace slags (including slag from waste incineration).
Group 5 Ash i.e. bottom ash and fly ash from wood, coal or waste combustion (excluding
fly ash from municipal, clinical, and hazardous waste incinerators and sewage
sludge incinerators).
Group 6 Low activity inorganic compounds.
Group 7 Calcium sulphate (excluding plasterboard).
Group 8 Calcium hydroxide and brine (Deposited in brine cavity).
Group 9 Water containing other qualifying material in suspension.
The landfill operator can agree that your waste is inactive but must keep sufficient evidence to justify applying the lower rate of tax to any load. The description on the transfer note must relate to wastes specified in the order quoted above. This issue is of increasing importance as operators of materials reclamation facilities (MRFs) will know that the ‘fines’ or ‘soils’ from their process can be highly variable in consistency and that the Environment Agency may classify the output as non-inert waste which could mistakenly lead to the levy of the full rate of tax at the weighbridge. The good news is that whether the Agency consider the waste to inert or not is irrelevant because inactive waste does not mean inert waste, however, it is still for the landfill operator to make the decision.
In the case of mixed loads, where waste contains both active and inactive materials, tax is due on the whole load at the standard rate. However, as long as it does not lead to any potential for pollution, you may ignore the presence of an incidental amount of active waste in a mostly inactive load, and treat the whole load as taxable at the lower rate. This could include a load of rubble containing small pieces of wood, a load of soil containing small quantities of grass and a load of soil and stone from street works containing tarmac. The main criteria for making the decision not to charge the full rate is that the small quantity of active waste does not have the potential to pollute or if it is difficult to separate active components from the inactive waste.
So if you feel that your waste is inactive take it up with the landfill operator and they should discuss it with HM Customs and Revenue. On a good day this will mean that fines which have little commercial value can be used as landfill cover or even restoration, which is almost always a requirement of the landfill permit. On a bad day it may mean that your waste will not be welcome as inactive and attract the higher rate. At a time when skip prices lag behind increases in disposal costs the disposal or further recycling of residues has become an important issue.
The answers to other landfill tax issues I regularly get asked are summarised below (please refer to www.hmrc.gov.uk for the full details):
1. The tax exemption for materials excavated from contaminated land does not apply to inert
or inactive waste but to waste which must be removed for the remediation to be
successful. A certificate of exemption must be applied for before disposal.
2. To discount the water content of waste from the taxable weight the water must not be
present naturally in the waste i.e. if the water has been added to allow transportation for
disposal or arisen or been added or both, in the course of an industrial process, for
example.
3. Tax free areas on landfill sites are set up to permit the deposit of waste for storage or
processing and not for disposal.
4. Restoration of quarries is exempt from the tax if certain conditions are met.
5. VAT applies to the full amount on load for disposal, including the landfill tax.
6. Dredgings (material removed from water) are exempt from landfill tax, with exceptions.
7. Waste arising from mining and quarrying operations and disposed of to landfill is exempt
from landfill tax, with exceptions.
8. Pet cemeteries are licensed as landfill sites but the burial of dead pets is not taxable.
9. Restoration of landfills e.g. after capping of the waste, may qualify for exemption for the
restoration materials as long as justification can be given to HMRC before waste used for
the purposes of restoring a landfill is deposited.
10. The landfill tax credit scheme allows the landfill operator to claim back 6.7% of landfill tax
paid for qualifying projects (local community environmental projects) regulated by
ENTRUST as long as the amount reclaimed contributes no more than 90% of the
project’s cost.

Marco Muia BSc (Hons) MSc MCIWM is the Director of Oaktree Environmental Limited. He specialises in all aspects of waste regulation consultancy and is a WAMITAB accredited assessor for the COTCs in waste transfer, treatment and inert landfill. He also holds the level 4 COTCs for Hazardous Waste Treatment and Transfer.