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 High Court challenge, brought by a private waste company, had sought to end VAT exemptions for councils. The removal of VAT exemption could take away 20 per cent of the income for commercial waste.

The Local Government Association (LGA) warned that, had the outcome of the ruling been different, councils could have seen up to £77 million per year disappear from their waste budgets.

The VAT exemption of commercial waste collection was introduced in 2011.

Cllr Martin Tett, LGA Environment spokesman, 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.

"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."