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Government’s aggregates levy credit scheme in line with state aid rules

The aggregates levy is an environmental tax on commercially exploited aggregates.

The European Commission yesterday (Monday 10 November) published full details on its decision to rule in favour of the government’s aggregates levy credit scheme (ALCS). The decision confirms that the scheme was in line with State aid rules, ending uncertainty for quarry operators in Northern Ireland.

The aggregates levy is an environmental tax on commercially exploited aggregates. The credit scheme gave an 80% tax credit for aggregates originating in Northern Ireland in return for quarries meeting environmental standards. The scheme ran from 1 April 2004 to 30 November 2010.

The Commission were forced to investigate the credit scheme after the British Aggregates Association (BAA) claimed that the scheme provided unlawful state aid. The Commission originally approved the scheme in 2004 and have again agreed with the UK government that the scheme does not provide unlawful aid, ending uncertainty for the industry in Northern Ireland.

The UK government was required to suspend the ALCS from 1 December 2010 during the Commission investigation, but is committed to reinstating the scheme.

However, this can only be done if the scheme receives further approval from the Commission on whether it meets the latest state aid rules. The government will work with the industry in Northern Ireland to make the case for this, and needs to await the outcome of a further Commission investigation into the levy.

Exchequer Secretary to the Treasury, Priti Patel said:

We welcome this decision, which ends a period of unnecessary uncertainty for quarry operators in Northern Ireland. We remain committed to reinstating the credit scheme as soon as possible.

The Commission’s decision also sets out the requirement for the UK to implement a scheme which will reimburse 80% of the levy paid on aggregate imported into Northern Ireland from other member states between 1 April 2004 and 30 November 2010.

The government will legislate in 2015 for this and more details will be set out shortly by HMRC.


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