Reform of the Landfill Communities Fund changes
Published 16 March 2016
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Who is likely to be affected
Landfill operators registered for Landfill Tax
Environmental bodies (EBs), including distributive environmental bodies, authorised under the Landfill Communities Fund (LCF) scheme
All organisations administering projects funded through the LCF
General description of the measure
Autumn Statement announced that the value of the LCF for 2016 to 2017 will be set at £39.3 million. Legislation will be made to amend the Landfill Tax Regulations 1996 to set the cap on contributions by landfill operators at 4.2%.
Autumn Statement announced a number of changes to the LCF. However, following consultation since Autumn Statement, the government has listened to concerns and now does not intend to proceed with the removal of provisions for contributing third parties to contribute 10% of landfill operators’ contributions to projects. Instead, HM Revenue and Customs (HMRC) and the fund’s regulator will publish guidance indicating that government expects to see landfill operators make a greater contribution to the fund.
This tax information and impact note replaces the one published at Autumn Statement to reflect this change.
Other amendments announced at Autumn Statement to the Landfill Tax Regulations will be made to:
- simplify record keeping requirements
- remove the provisions that allow landfill operators to stipulate that funds must be invested for the purpose of generating interest
- remove provisions permitting administration services to be provided by one EB to another
Policy objective
Changes are being made which will improve the flow of funds to communities by removing barriers that prevent funds reaching projects and ensure value for money for the taxpayer.
Background to the measure
Following the failure of the sector to meet the government’s challenge to reduce the value of unspent funds, a consultation ‘Reform of the Landfill Communities Fund’ was published in March 2015. The consultation sought views on proposals developed by a government- industry working group which aimed to improve the flow of funds to communities by removing barriers that prevent or delay funding reaching projects.
Detailed proposal
Operative date
The measure will have effect on and after 1 April 2016.
Current law
The Landfill Tax Regulations 1996 (SI 1996/1527), regulations 30-36, prescribe the rules for the operation of the Landfill Communities Fund.
Proposed revisions
The Landfill Tax (Amendment) Regulations 2016 will amend the Landfill Tax Regulations 1996.
The amendments will apply to contributions made from 1 April 2016 and will:
- change the maximum credit that landfill site operators may claim against their annual Landfill Tax liability when making contributions in respect of the LCF, reducing it from 5.7% to 4.2%
- remove the provision that allows a landfill operator to make a qualifying contribution subject to a condition that it must be invested for the purpose of generating interest
- remove object (f) which allows LCF funds to be used for the provision of financial, administration and other similar services from one EB to another EB
- restrict the length of time records need to be retained to 6 years
Exchequer impact (£m)
| 2015 to 2016 | 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 |
|---|---|---|---|---|---|
| nil | +20 | +20 | +20 | +20 | +20 |
These figures are set out in Table 3.1 of Autumn Statement 2015 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2016.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
The measure is not expected to impact on individuals, households or family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be any impact on groups sharing protected characteristics.
Impact on business including civil society organisations
Registered landfill operators and environmental bodies, including distributive environmental bodies, will have to familiarise themselves with the changes to the Regulations and may have to make changes to business practices and records that they keep as a result of the changes. There will be a reduction in administrative burden for all organisations in receipt of LCF funding from the reduction in the length of time records have to be retained Both the one-off and ongoing impacts are expected to be negligible.
Operational impact (£m) (HMRC or other)
There is no impact on HMRC.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be monitored though the existing compliance programme for Landfill Tax and as part of the existing arrangements for monitoring the LCF.
Further advice
If you have any questions about this change, please contact the Revenue and Customs helpline on Telephone: 03000 200 3700.