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LGA - Judicial review backs councils' call for commercial waste VAT exemption to remain

A judicial review has ruled councils in England should remain exempt from VAT on commercial waste collections - potentially saving local authorities and small businesses many millions of pounds.

The Local Government Association (LGA), which represents more than 370 councils and was pivotal to the ruling – has said the decision is a "huge victory for councils".

Had this week's ruling gone the other way, the LGA had warned councils could have seen up to £77 million per year disappear from their waste budgets.  

To protect their local small businesses and avoid unwanted consequences such as increased levels of fly-tipping, most councils would have been under pressure to absorb VAT into existing charging levels  – rather than adding 20 per cent to collection services.

The High Court challenge, brought by a private waste company, had sought to end VAT exemptions for councils.

The LGA had strongly opposed the loss of exemptions - warning it was a critical issue for councils and providing evidence to the inquiry.

LGA Environment spokesman Cllr Martin Tett said: "This is fantastic news and a huge victory for councils and it will mean savings of many millions to them at a time when many local authorities have experienced substantial budget reductions. The LGA has been at the forefront of campaigning for this exemption.

"Councils want to do everything they can to support local businesses and potentially absorbing the extra 20 per cent would have had a major impact on budgets, meaning them spending less on things like caring for old people and fixing potholes.

"Local authorities have delivered a transformation in waste and recycling services over the last 10 years reducing landfill by 62 per cent and increasing recycling from 23 per cent to over 43 per cent. At the same time the LGA's polling shows that more than eight in 10 of the public are happy with the way their bins are collected. There is no one-size-fits-all solution when it comes to waste services and councils will always work with householders while managing budgetary cuts in order to offer the best service possible for their residents."

Case Studies

Durham County Council

It is illegal to dispose of commercial or trade waste at Household Waste Recycling Centres (tips). Durham offers a trade waste collection service to businesses from as little as £92 a year.

Birmingham City Council

Birmingham City Council is the largest local authority in the UK and manages the largest domestic, commercial refuse collection and disposal operation of any local authority.

Surrey County Council

Business waste can be taken to a waste transfer station where it will be weighed and a charge made for its disposal.


  • The VAT exemption of commercial waste collection was introduced in 2011 on the basis that all waste collection authorities have a duty to arrange for the collection of commercial waste under section 45(1) of the Environmental Protection Act 1990 (if requested to do so). 
  • Preliminary analysis suggests a large proportion of the 326 English waste collection authorities offer a commercial waste collection service. The removal of VAT exemption could take away 20 per cent of the income for commercial waste, which would be between £34.4 and £77.6 million, but still leave them with the cost of providing the service and the duty as the collector of last resort. The revenue from commercial waste services varies significantly between councils, from tens of thousands per year to several million depending on the size of the council and the number of businesses in the area.
  • The waste firm had brought the judicial review against HMRC – which ruled to introduce VAT exemptions for councils providing commercial waste services in 2011, on the basis that they have a duty to arrange for collections under the Environmental Protection Act 1990.

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