Autumn Budget 2025: Planned Landfill Tax Changes Dropped
The Autumn Budget 2025 has delivered long-awaited clarity on several major waste and environmental policy areas. Among the most significant announcements is the government’s decision to abandon its proposed overhaul of landfill tax, a reform that had caused considerable concern across the waste, construction and mineral products sectors over the past year.
Alongside this reversal, the Budget also sets out the next steps for the Plastic Packaging Tax (PPT) and outlines targeted funding measures for Defra as it continues to navigate reduced departmental spending.
Landfill Tax Reform Dropped
Chancellor Rachel Reeves confirmed that ministers will no longer pursue plans to merge the standard and lower landfill tax rates, shelving proposals that had previously been under active consideration.
Earlier in 2025, the Treasury had explored abolishing the lower rate completely and tightening existing exemptions. The review was prompted by warnings from the Environment Agency about some operators misclassifying waste to access cheaper rates – an issue that has drawn increasing scrutiny.
However, the proposals were met with strong industry resistance. Businesses warned the reforms would dramatically increase operating costs, particularly for legitimate sites handling large volumes of low-grade waste, and risk undermining national housebuilding targets, including the delivery of 1.5 million new homes.
The Budget confirms that:
- Both landfill tax rates will remain in place, with the government committing to prevent the gap between them widening further.
- The quarry backfilling exemption will be retained, protecting a low-cost disposal route relied upon by construction and mineral operators.
The Treasury stated that it had “listened to stakeholders” and adjusted its approach to avoid imposing disproportionate costs on compliant businesses.
Mark Russell, Executive Director of the MPA, welcomed the reversal, describing it as “a real relief” and noting that the original proposals would have had serious implications for construction, the wider economy and conservation work.
Plastic Packaging Tax: Direction Maintained, But No Bold Changes
The Autumn Budget delivered confirmation, rather than surprise, on the Plastic Packaging Tax.
Key developments include:
- PPT rates will rise in line with CPI inflation for 2026 – 27, continuing incremental pressure on businesses to increase recycled plastic content.
- A consultation will open in early 2026 exploring mandatory certification for mechanically recycled packaging used to qualify for PPT exemptions.
- As planned, chemically recycled plastic will become eligible through mass balance allocation from April 2027, echoing provisions set out in the previous year’s Budget.
While some stakeholders welcomed the clarity, others argued the measures fall short of what is needed to stimulate investment in domestic recycling capacity.
Defra Funding: Targeted Support Despite Broader Cuts
Although the Spending Review 2025 confirmed an overall reduction in Defra’s departmental budget, the Autumn Budget allocates targeted new funding to address specific barriers within the waste and redevelopment sectors.
Most notably, the government will introduce grant support for public bodies dealing with contaminated or previously developed land where landfill tax costs make remediation financially unviable.
According to the Treasury, the funding is intended to unlock additional regeneration sites while still delivering a net increase in landfill tax receipts associated with remediation activity.
Staying Compliant Amid Policy Shifts
As waste policy and taxation continue to evolve, businesses need waste disposal and recycling partners they can rely on. Affordable Waste Management provides fully licensed commercial waste collections, clear documentation and compliant disposal routes to help organisations stay ahead of regulatory changes, without unexpected costs or operational disruption.