Aggregates Levy
Summary
The Aggregates Levy is an environmental tax on the commercial exploitation of primary aggregate in the UK. The Levy was introduced to address the environmental costs associated with quarrying that are not already covered by regulation, including noise, dust, visual intrusion, loss of amenity and damage to biodiversity. The Levy aims to bring about environmental benefits by making the price of aggregates better reflect these costs and encouraging the use of alternative materials such as recycled materials and certain waste products. It is currently set at £1.60 per tonne and came into affect on the 1st April 2002.
The Aggregates Levy Sustainability Fund has been set up to focus on the minimisation of primary aggregates and reducing environmental impact. This fund part finances WRAPs Aggregates Programme[1]. Emerging evidence suggests that overall primary aggregates extraction has fallen since the Levy's introduction and the use of recycled and secondary aggregates has increased. This piece of legislation has therefore created an economic incentive for construction companies to use recycled materials and should continue to do so, as long as the recycled and secondary aggregates are in good supply, of satisfactory quality and are practical to use. A consultation on the future priorities for the Aggregates Sustainability Fund in Spring 2008 identified the five key objectives of the Fund until March 2011. Those of most concern to the construction industry are:
- To deliver more sustainable use of aggregates
- To reduce the environmental footprint of the transport of aggregates.
Implications
As the levy is applied to all new aggregate products, it is in industry’s best interest to think about using recycled aggregates instead. However, they must ensure that these products are of the same quality as new ones. May have to source new suppliers of materials. This will therefore have an effect on suppliers to the construction industry, with some losing out to those who are able to offer recycled products. Furthermore, the transport of aggregates will become an area of focus and consequently impact upon suppliers of aggregates and the purchasing behaviour of construction companies.
Overlaps
The levy system is similar to Landfill tax, as both use a system of charges to encourage more sustainable use of products.
Opportunities
Using recycled aggregates means they will avoid paying the levy. This could also lead to a greater awareness of recycled products. Suppliers offering recycled aggregates are likely to have an increase in business.
Guidance
Further information and guidance can be found on the HMRC website.