Landfill Tax reforms: what’s the potential cost to construction?

Proposals to reform Landfill Tax could have far-reaching implications for contractors, developers and clients; not only in terms of cost, but in the viability of sustainable waste management at scale. BCIS assesses the risks, opportunities and outstanding questions for the industry.

The government’s recent consultation⁽¹⁾ on Landfill Tax reform in England and Northern Ireland sought industry opinions on:

• Transitioning to a single rate of Landfill Tax by 2030
• Removing the Qualifying Fines Regime from April 2027
• Removing the exemption for filling quarries from 2027
• Removing the exemption for stabilisers used in dredged material from April 2027
• Removing the water discounting scheme from April 2027
• Increasing the rate applied to disposals at unauthorised waste sites

A devolved issue, Scotland and Wales set their own rates but are currently carrying out their own consultations.

The UK government’s intention is to clamp down on tax avoidance and drive more waste up the waste hierarchy but according to industry experts, including the Mineral Products Association (MPA), the potential, unintended consequences could be severe⁽²⁾.

Cost impact: from thousands to millions

The MPA warns that losing the quarry exemption could put more than 50 active UK quarries at risk. Without access to tax-free inert fill material (such as chalk, clay, or subsoil), many operators say sites could become uneconomic to restore, impacting both aggregate supply and environmental outcomes.

The knock-on costs to the wider built environment are significant. MPA has estimated housebuilders could face more than £20,000 in added costs per unit, due to increased disposal fees and that major infrastructure schemes may see costs increase by tens or hundreds of millions.

On a project generating 10,000 tonnes of qualifying inert waste, tax liability could rise from around £40,000 today to over £1.2 million by 2030, assuming no alternative disposal is found.

While these figures represent worst-case scenarios, they illustrate the scale of the risk for project cost plans and tendering.

The British Aggregates Association has also warned that the reforms could raise the cost of legally permitted disposal routes, increase the risk of waste crime, and undermine the circular economy principles the government aims to promote⁽³⁾.

The Specialist in Land Condition Register further highlighted the implications for brownfield regeneration⁽⁴⁾. They estimate that the proposed reforms could add £8,000 to £12,000 to the cost of every new home, as well as threatening the viability of recycling facilities and penalising sustainable soil and material reuse.

Labour and logistics: a double challenge

With the removal of exemptions and added cost burdens, disposal routes could narrow, leading to increased transport distances, greater emissions, and higher demand for licensed recycling or recovery infrastructure.

That brings another challenge: are we ready? Many contractors, especially SMEs, may not currently have access to viable alternatives for reprocessing low-value waste. And with the Environment Agency reportedly still facing slow permitting timescales following COVID disruption, any transition risks significant disruption unless capacity is scaled up quickly.

In an attempt to highlight to the government what it calls the ‘true costs’ of its proposals, the Country Land and Business Association is calling instead for properly resourced regulation to support the continued viability of rural mineral projects and site restoration, negating the need for dramatic changes⁽⁵⁾.

Sustainability at risk: aligned aims, misaligned mechanisms?

The stated aim of the reforms is environmental: to reduce unnecessary disposal and drive sustainable waste management. But some argue the proposals may in fact discourage positive environmental outcomes:

• Quarry restoration could be delayed or abandoned due to cost, harming biodiversity and community regeneration.
• Recycled aggregates could become less available if quarries close, increasing reliance on raw materials and imports.
• Inert materials with no viable reuse route may be diverted to more carbon-intensive handling such as long-haul disposal or incineration.

Wildlife and Countryside Link, a coalition of environmental charities, has supported the move to a single rate of Landfill Tax and the removal of exemptions. They argue these changes are necessary to drive materials up the waste hierarchy and reduce reliance on virgin raw materials, particularly from the construction sector⁽⁶⁾.

However, they stress that tax reform alone is insufficient: without stronger investment in reuse and recycling infrastructure, financial incentives like extended producer responsibility and VAT reform, and better enforcement against illegal dumping, the reforms risk encouraging downcycling, incineration, and fly-tipping.

What construction professionals should look out for

For cost consultants, contractors and asset owners, the consultation flags three key considerations that are likely to become increasingly important:

• To review long-term waste assumptions in cost plans and risk assessments, especially for major works and infrastructure tied to quarry-based sourcing or disposal.
• Track regulatory developments and seek clarity on transitional arrangements. If ‘deposit for recovery’ routes become overloaded or remain under-defined, disruption is likely.
• Engage early with supply chain partners to identify viable, low-carbon waste and aggregate solutions, and understand the true cost exposure.

At present, the reforms are at consultation stage and the final shape of the policy is yet to be confirmed. But, if implemented without significant support or infrastructure investment, they risk increasing costs for projects while undermining some of the very environmental goals they aim to support.

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^{(1) GOV.UK – Closed consultation – Consultation on reform of Landfill Tax – here}

^{(2) MPA – Landfill Tax reforms could trigger shortages and damage growth ambitions – here}

^{(3) Aggnet – Landfill Tax Reform: Major changes ahead – here}

^{(4) SiLC – SiLC Responds to HMRC Consultation on Landfill Tax Reform – here}

^{(5) CLA –  Shaping rural mineral policy: insights from the CLA’s Mineral Working Party – here}

^{(6) Consultation on Reform of Landfill Tax in England and Northern Ireland – Wildlife and Countryside Link Response – here}