A Treasury consultation launched in July 2025 proposed 
eliminatingexisting reduced-rate or exempt status on around 7.5 million tonnes of waste currently enjoying landfill tax relief, potentially raising up to £1 billion per year.
Sectors particularly exposed—construction, steel, property development, and manufacturing—are watching closely, warning of cost spikes and disruption.
Rising Costs and Industry Impact
Currently, landfill tax rates stand at £126.15 per tonne standard, with a £4.05 reduced rate. Removing exemptions or lower bands could sharply raise disposal costs for construction and steel firms. One major housebuilder estimates liabilities could swell from “millions to over £100 million” if reforms proceed as proposed. UK Steel cautions that the changes could harm competitiveness, jeopardize decarbonisation plans, and encourage offshoring of slag or dust management.
Practical Steps for Affected Firms
- Audit waste streams: Identify currently exempt or reduced-rate material. Forecast possible liabilities under full-rate scenarios.
- Revise budgeting and pricing: Factor higher landfill costs into quotes, contracts, and margin assumptions.
- Consider circular economy options: Invest in recycling facilities, reuse schemes, and waste brokers to reduce landfill reliance.
- Supply chain partnerships: Explore downstream recycling arrangements with specialist waste processors to avoid landfill altogether.
The Wider Business Environment
These proposals come amid broader fiscal pressure on businesses. Retail and hospitality already face job losses, business-rate pressures, and VAT/rental burdens. The new landfill tax adds further strain, particularly on sectors with tight margins or reliance on raw materials and disposal-heavy processes. Meanwhile, Chancellor Rachel Reeves continues grappling with high public borrowing and a potential £30 billion shortfall, prompting speculation on further business taxes or levies.
What to Watch in the Next 30 Days
- Final landfill tax consultation report: Expected later in August—will clarify which exemptions may be removed.
- Parliamentary debate: Industry bodies (e.g., CBI, UK Steel) expected to lobby during autumn legislative sessions.
- Tax relief or transitional support: Government may consider phased implementation or relief for SMEs and critical sectors.
Strategic Advice for Businesses
Businesses should engage proactively:
- Join trade bodies (e.g., Federation of Small Businesses, UK Steel, Construction Leadership Council) to influence consultation outcomes.
- Plan cash flow scenarios under full landfill tax.
- Consult your accountant for tax-efficiency planning: some recycling or low-environmental-impact processes may attract Enhanced Capital Allowances, R&D tax credits, or reduced business-rate valuations.
While still under consultation, the landfill tax reform could significantly affect business profitability, competitiveness, and environmental practices. Early planning and engagement will help firms adapt strategically—and perhaps shape a fairer outcome.