The UK government introduced landfill tax in 1996, aiming to discourage the disposal of waste in landfills and promote recycling. According to HM Revenue and Customs (HMRC), landfill tax is “not primarily intended as a revenue-generating tool” but instead to drive behavioural changes in waste management.
To achieve this, HMRC employs a two-tier tax system: a lower rate for non-decomposable waste and a higher rate for waste that releases greenhouse gases upon decomposition.
Go deeper with GlobalData
Since its introduction, landfill tax has been successful in reducing waste sent to landfill, resulting in a 90% decrease by local authorities alone.
However, with the tax increase over recent years, incentives for tax evasion have grown. In 2019-2020, HMRC estimated a £200 million shortfall due to landfill tax evasion, describing it as the second-largest tax gap across all taxes.
This shortfall arises from tactics like mislabelling waste to qualify for a lower tax rate and illegal dumping. “We are actively working to reduce this gap,” HMRC stated, adding that it collaborates closely with landfill operators to enforce compliance.
Yet, prosecuting landfill tax evasion remains challenging. Despite some success in civil cases, only one criminal prosecution is currently underway, and HMRC is “still learning” how to best investigate this kind of crime.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData2. Deterring waste crime and strengthening regulations
Beyond tax evasion, waste crime is on the rise, with organised crime groups increasingly involved. Under current regulations, almost anyone can register as a waste carrier, creating a loophole that criminals exploit.
Fraudulent operators mislead farmers and other landowners, leaving them responsible for waste disposal after vanishing without a trace. To counter this, the Environment Agency is calling for tighter controls on who can operate within the waste sector, including background checks and evidence of technical competence.
The Agency acknowledges that harsher penalties, such as custodial sentences, are essential deterrents, yet many current fines are too low to have any significant impact.
“Fines are often treated as business expenses by these criminals,” said the Agency, which now more frequently uses the Proceeds of Crime Act to confiscate assets from offenders.
This approach not only deters criminals but also redirects funds back to the Agency. Stronger regulations, the Agency argues, would make it tougher for rogue operators to enter the industry and discourage repeat offences.
3. Combating fly-tipping and illegal exports
Fly-tipping remains a significant issue across the UK, affecting both urban and rural areas. In 2020-2021, local authorities recorded 1.1 million cases of fly-tipping, with the National Farmers Union (NFU) noting that two-thirds of farmers are affected by the problem.
The NFU highlighted how this illegal dumping often leaves landowners with the burden of clearing waste, at times costing tens of thousands of pounds.
Defra, the Department for Environment, Food & Rural Affairs, noted that “local authorities are responsible for dealing with fly-tipping,” but limited resources and competing priorities mean enforcement remains inconsistent.
Illegal waste exportation also poses a challenge. An estimated 14 million tonnes of waste are exported legally each year, but significant quantities are still shipped abroad illegally. In a recent case, a major waste company was fined £1.5 million for such violations.
The Agency is working to intercept more waste shipments at the port level, having prevented approximately 18,000 tonnes from leaving the UK last year alone.
Nevertheless, illegal exports are challenging to track, with the Environmental Services Association estimating that around 400,000 tonnes slip through the cracks annually, costing the UK economy an estimated £42 million.
By reforming regulatory frameworks, improving enforcement, and raising penalties, the government aims to curb waste crime.
However, tackling the deeply entrenched issues of landfill tax evasion, waste crime, and fly-tipping will require a concerted effort across government, law enforcement, and industry.
