The Aggregates Levy came into operation on 1 April 2002 in the UK, except for Northern Ireland where it has been phased in overfive years from 2003.
It was introduced to ensure that the external costs associated with the exploitation of aggregates are reflected in the price of aggregate, and to encourage the use of recycled aggregate. There continues to be strong evidence that the levy is achieving its environmental objectives, with sales of primary aggregate down and production of recycled aggregate up. The Government expects that the rates of the levy will at least keep pace with inflation over time, although it accepts that the levy is still bedding in.
The rate of the levy remains at £2.00 per tonne from 1 April 2014 and is levied on anyone considered to be responsible for commercially exploiting ‘virgin’ aggregates in the UK and should naturally be passed by price increase to the ultimate user.
All materials falling within the definition of ‘Aggregates’ are subject to the levy unless specifically exempted.
It does not apply to clay, soil, vegetable or other organic matter.
The intention is that it will:
Encourage the use of alternative materials that would otherwise be disposed of to landfill sites.
Promote development of new recycling processes, such as using waste tyres and glass.
Promote greater efficiency in the use of virgin aggregates.
Reduce noise and vibration, dust and other emissions to air, visual intrusion, loss of amenity and damage to wildlife habitats.
Definitions
‘Aggregates’ means any rock, gravel or sand which is extracted or dredged in the UK for aggregates use. It includes whatever substances are for the time being incorporated in it or naturally occur mixed with it.
‘Exploitation’ is defined as involving any one or a combination of any of the following:
Being removed from its original site.
Becoming subject to a contract or other agreement to supply to any person.
Being used for construction purposes.
Being mixed with any material or substance other than water, except in permitted circumstances.
Incidence
It is a tax on primary aggregates production– i.e. ‘virgin’ aggregates won from a source and used in a location within the UK territorial boundaries (land or sea). The tax is not levied on aggregates which are exported or on aggregates imported from outside the UK territorial boundaries.
It is levied at the point of sale.
Exemption from tax
An‘aggregate’ is exempt from the levy if it is:
Material which has previously been used for construction purposes
Aggregate that has already been subject to a charge to the Aggregates Levy
Aggregate which was previously removed from its originating site before the start date of the levy
Aggregate which is being returned to the land from which it was won
Aggregate won from a farm land or forest where used on that farm or forest
Rock which has not been subjected to an industrial crushing process
Aggregate won by being removed from the ground on the site of any building or proposed building in the course of excavations carried out in connection with the modification or erection of the building and exclu-sively for the purpose of laying foundations or of laying any pipe or cable
Aggregate won by being removed from the bed of any river, canal or watercourse or channel in or approach to any port or harbour (natural or artificial), in the course of carrying out any dredging exclusively for the purpose of creating, restoring, improving or maintaining that body of water
Aggregate won by being removed from the ground along the line of any highway or proposed highway in the course of excavations for improving, maintaining or constructing the highway otherwise than purely to extract the aggregate
Drill cuttings from petroleum operations on land and on the seabed
Aggregate resulting from works carried out in exercise of powers under the New Road and Street Works Act 1991, the Roads (Northern Ireland) Order 1993 or the Street Works (Northern Ireland) Order 1995
Aggregate removed for the purpose of cutting of rock to produce dimension stone, or the production of lime or cement from limestone.
Aggregate arising as a waste material during the processing of the following industrial minerals:
ball clay
barytes
calcite
china clay
coal, lignite, slate or shale
feldspar
flint
fluorspar
fuller's earth
gems and semi-precious stones
gypsum
However, the levy is still chargeable on any aggregates arising as the spoil or waste from or the by-products of the above exempt processes. This includes quarry overburden.
Anything that consists‘wholly or mainly’ of the following is exempt from the levy (note that ‘wholly’ is defined as 100% but‘mainly’ as more than 50%, thus exempting any contained aggregates amounting to less than 50% of the original volumes:
clay, soil, vegetable or other organic matter
coal, slate or shale
68 The Aggregates Levy
china clay waste and ball clay waste.
Relief from the levy either in the form of credit or repayment is obtainable where:
it is subsequently exported from the UK in the form of aggregate
it is used in an exempt process
where it is used in a prescribed industrial or agricultural process
it is waste aggregate disposed of by dumping or otherwise, e.g. sent to landfill or returned to the originating site.
The Aggregates Levy Credit Scheme (ALCS) for Northern Ireland was suspended with effect from 1 December 2010 following a ruling by the European General Court.
A new exemption for aggregate obtained as a by-product of railway, tramway and monorail improvement, main-tenance and construction was introduced in 2007.
Discounts
From 1 July 2005 the standard added water percentage discounts listed below can be used. Alternatively a more exact percentage can be agreed and this must be done for dust dampening of aggregates.
washed sand 7%
washed gravel 3.5%
washed rock/aggregate 4%.
Impact
The British Aggregates Association suggested that the additional cost imposed by quarries is more likely to be in the order of £3.40 per tonne on mainstream products, applying an above average rate on these in order that by-products and low grade waste by-products can be held at competitive rates, as well as making some allowance for administration and increasedfinance charges.
With many gravel aggregates costing in the region of £16.00 to £18.00 per tonne, there is a significant impact on construction costs.
Avoidance
An alternative to using new aggregates in filling operations is to crush and screen rubble which may become available during the process of demolition and site clearance as well as removal of obstacles during the excavation processes.
The Aggregates Levy 69
Example: Assuming that the material would be suitable for fill material under buildings or roads, a simple cost comparison would be as follows (note that for the purpose of the exercise, the material is taken to be 1.80 tonne per m³ and the total quantity involved less than 1,000 m³):
Importingfill material: £/m³ £/tonne
Cost of‘new’ aggregates delivered to site 31.39 17.44
Addition for Aggregates Tax 3.60 2.00
Total cost of importingfill materials 34.99 19.44
Disposing of site material: £/m³ £/tonne
Cost of removing materials from site 17.00 9.44
Crushing site materials: £/m³ £/tonne
Transportation of material from excavations or demolition to stockpiles 1.50 0.83 Transportation of material from temporary stockpiles to the crushing plant 2.00 1.11 Establishing plant and equipment on site; removing on completion 2.00 1.11
Maintain and operate plant 9.00 5.00
Crushing hard materials on site 13.00 7.22
Screening material on site 2.00 1.11
Total cost of crushing site materials 29.50 16.38
From the above it can be seen that potentially there is a great benefit in crushing site materials for filling rather than importingfill materials.
Setting the cost of crushing against the import price would produce a saving of £5.49 per m³. If the site materials were otherwise intended to be removed from the site, then the cost benefit increases by the saved disposal cost to
£22.49 per m³.
Even if there is no call for any or all of the crushed material on site, it ought to be regarded as a useful asset and either sold on in crushed form or else sold with the prospects of crushing elsewhere.
Specimen unit rates Unit³ £
Establishing plant and equipment on site; removing on completion
crushing plant trip 1,200.00
screening plant trip 600.00
Maintain and operate plant
crushing plant week 7,200.00
screening plant week 1,800.00
Transportation of material from excavations or demolition places to temporary stockpiles m³ 3.00 Transportation of material from temporary stockpiles to the crushing plant m³ 2.40 Breaking up material on site using impact breakers
mass concrete m³ 14.00
reinforced concrete m³ 16.00
brickwork m³ 6.00
70 The Aggregates Levy
Crushing material on site
mass concrete not exceeding 1000 m³ m³ 13.00
mass concrete 1000–5000m³ m³ 12.00
mass concrete over 5000 m³ m³ 11.00
reinforced concrete not exceeding 1000 m³ m³ 15.00
reinforced concrete 1000–5000m³ m³ 14.00
reinforced concrete over 5000 m³ m³ 13.00
brickwork not exceeding 1000 m³ m³ 12.00
brickwork 1000–5000m³ m³ 11.00
brickwork over 5000 m³ m³ 10.00
Screening material on site m³ 2.00
More detailed information can be found on the HMRC website (www.hmrc.gov.uk) in Notice AGL 1 Aggregates Levy published in May 2009.
The Aggregates Levy 71
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