ICAEW's Tax Faculty's provides a summary of the announcements on environmental taxes in the Spring Budget 2021, covering landfill taxes, the climate change levy, the aggregates levy and carbon price support.
Plastic packaging tax
A new plastic packaging tax will be introduced from April 2022.
This will affect UK manufacturers of plastic packaging, importers of plastic packaging, business customers of manufacturers and importers of plastic packaging, and consumers who buy plastic packaging or goods in plastic packaging in the UK. Manufacturers and importers of less than 10 tonnes of plastic packaging per year will be exempt.
The new tax will not apply to plastic packaging containing at least 30% recycled plastic.
Find out more:
Landfill tax rates
The standard and lower rates of landfill tax will both increase in 2021 and 2022 in line with the retail prices index (RPI), rounded to the nearest 5 pence. The rates being amended, and the new rates will be:
| Material sent to landfill | Rate from 1 April 2020 | Rate from 1 April 2021 | Rate from 1 April 2022 |
|---|---|---|---|
| Coverage | England and Northern Ireland | England and Northern Ireland | England and Northern Ireland |
| Standard rated (per tonne) |
£94.15 |
£96.70 |
£98.60 |
| Lower rated (per tonne) | £3 |
£3.10 |
£3.15 |
Landfill tax was devolved to the Scottish Parliament in April 2015 and to the Welsh Parliament/Sennedd Cymru in April 2018.
Landfill communities fund for 2021 to 2022
The value of the landfill communities fund for 2021 to 2022 will be £34.4m, with the cap on contributions by landfill operators remaining at 5.3% of their landfill tax liability.
Climate change levy rates
The main and reduced rates for 2021 to 2022 and the rates for 2022 to 2023 and 2023 to 2024 announced at the March Budget 2020 are as follows:
Main rates:
| Taxable commodity | Rate from 1 April 2021 | Rate from 1 April 2022 | Rate from 1 April 2023 |
|---|---|---|---|
| Electricity (£ per kilowatt hour (KWh)) | 0.00775 | 0.00775 | 0.00775 |
| Natural gas (£ per KWh) | 0.00465 | 0.00568 | 0.00672 |
| LPG (£ per kilogram (kg)) | 0.02175 | 0.02175 | 0.02175 |
| Any other taxable commodity (£ per kg) | 0.03640 | 0.04449 | 0.05258 |
Reduced rates:
| Taxable commodity | Rate from 1 April 2021 | Rate from 1 April 2022 | Rate from 1 April 2023 |
|---|---|---|---|
| Electricity | 8% |
8% | 8% |
| Natural gas | 17% | 14% | 12% |
LPG |
23% | 23% | 23% |
| Any other taxable commodity | 17% | 14% | 12% |
These rates will be legislated for in FB 2021.
Carbon price support rates for 2022 to 2023
The carbon price support rate per tonne of carbon dioxide (CO2) emitted will be frozen at £18 for 2022 to 2023.
Aggregates levy rate 2021 to 2022
The aggregates levy rate will be frozen at £2 per tonne in 2021 to 2022 but is intended to return to index-linking in the future.
Tax Faculty
This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
More on Budget 2021
Read the rest of the Tax Faculty's summary of the tax related announcements in the Budget on 3 March 2021.
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