The government’s changes to the aggregates levy prioritise use of recycled material

Latest News | Policy and Regulations

Recent changes in legislation, due to come into force next year, will continue to prioritise the increased use of recycled aggregates over virgin material.

The aggregates levy, a UK tax on the commercial exploitation of rock, sand and gravel, first introduced as an environmental tax to encourage the recycling of aggregate, is to be revised early next year, but the focus will remain on encouraging use of recycled material.

The move follows a 2019 consultation on the levy and according to the government the aim is to “ensure fairness by taxing borrow pit aggregate extracted for construction use in the same way as commercially-produced construction aggregate”.

In addition, the government is seeking to:

“Strengthen the levy’s environmental objective to encourage the efficient extraction and use of all aggregates. By exempting recycled and by-product aggregate, the levy encourages the use of these materials in place of primary virgin aggregate,”

it said on its web site.

Published as part of the draft 2023 Finance Bill, the measures are due to come into force on 1 April next year.

Law firm, Pinsent Masons, which lobbied on the issue, recently published a blog post on the subject welcoming the forthcoming amendments.

“The change will reduce the arbitrary dividing lines for construction by-products and make administration of the levy simpler and less burdensome for clients in the infrastructure industry,”

said partner at the firm Steven Porter.

According to the government, it is not anticipated that implementing the change will incur any additional costs or savings for the treasury.

However, more changes are set to come: the devolved Government in Scotland in September announced plans in its programme for government for a specific devolved tax, the Scottish Aggregates Levy.

New Scottish legislation will set out the key arrangements for the tax, including the scope of the tax, the rates of levy payable, as well as reliefs and exemptions. The Scottish Aggregates Levy will replace UK Aggregates Levy on the commercial exploitation of aggregates in Scotland from 2026.

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