Digital Waste Tracking: business regulatory impact assessment

8. Option 3 (Preferred option): Digital Waste Tracking service for all waste

119. Under Option 3 a mandatory digital Waste Tracking service for all waste will be created. It will provide a means for businesses to record all waste movements and transfers in one central service and will enable the effective tracking of waste through the economy. All actors in the waste sector will be onboarded and required to submit information on waste movements, production and treatment. Costs and benefits are in addition to the baseline.

120. Option 3 will be delivered on a phased basis, starting with waste receiving sites. The Digital Waste Tracking (Scotland) Regulations 2026 cover only this first phase. Analysis set out below applies to full implementation of digital Waste Tracking service for all waste.

8.1 Costs to Government

121. The costs to government under Option 3 are the capital and ongoing costs of building and maintaining the service. Most of these costs are recoverable through the service charge for users. Build costs are expected to be higher than Option 2. This is because this option applies to all waste companies, not just receivers. Similarly to Option 2, there will be a temporary secondary data submission method for approx. 12 months.

122. There will be a CDEL transition cost to build and implement the new waste tracking service which will cost £10.5m (£10.3m discounted) over a 2-year period (2026-2027),. Maintaining the service over the appraisal period also incurs an RDEL cost of £24.46m (£21.29m discounted) across the UK.

8.2 Cost to Business: Service Charge (Transfer to Government)

123. As with Option 2, the ongoing running and management costs of a Waste Tracking service for all waste will be met by users of the service through an annual service charge. However, we expect that the running and management costs of a service for all waste businesses will be higher for a system that records data on all waste.

124. The build and running costs under a Waste Tracking system for all users will be spread between more businesses (an additional 117,853 sites) than a system for permitted receiving sites only (11,765 sites), resulting in a lower ‘per business’ cost. As with Option 2, after year 10 of the service the full build cost will have been amortised, resulting in a lower service charge for users from years 11-15 of the appraisal period across the UK (£3.3m till 2035, then £1.87m till 2040-undiscounted).

8.3 Cost to Business: Transition costs

125. Under Option 3, there will be transition costs for all permitted receiving sites and all carriers, brokers and dealers (CBDs), to record their waste data on the new Digital Waste Tracking platform. This is because Option 3 requires all businesses that produce, transport or manage waste to digitally record and submit their waste movements, rather than only receiving sites under Option 2.

126. The same methodology was used to calculate transition costs in Option 3 as Option 2. This includes HMRC Making Tax Digital assumptions for number of hours taken for set up and familiarisation, the number of receivers/CBDs provided by regulators and ONS hourly rate for waste management admin staff. These costs are expected to be higher than in Option 2 because the number of businesses in scope is significantly greater (Table 16).

127. Businesses that initially opt to use the temporary secondary submission method will incur an additional transition cost when they later move onto full software integration after the first year (Table 17). These have been accounted for in cost estimates. In total, transition costs under Option 3 account to £2.09m (£2.03m discounted) for receiving sites and £20.68m (£19.39m discounted) for CBDs, across the UK over a 5-year period (2026-2030).

8.4 Cost to Business: Software

128. As with Option 2, businesses will need access to waste management software in order to comply with DWT service. Some operators already use commercial software to manage waste records, but those who do not will need to purchase software or upgrade their existing systems. These software costs are expected to be recurring (monthly or annual license fees charged by software vendors). Digitally excluded persons may submit records to the Regulator via an alternative, non-digital route (see Section 15).

129. To estimate these ongoing costs, we applied the total number of receiving sites and CBDs (as provided by regulators) and assumed that only businesses who have existing software and moving to the software API option, will not have to pay for software. The same methodology was applied as for Option 2.

130. We estimate that the total discounted cost of software to receivers and CBDs will be £571.5m, £743.6m undiscounted across the UK (Table 18).

8.5 Benefits to Government: Tax revenues resulting from reduced waste crime

131. Option 3 will offer significant benefits to society, regulators, businesses and the governments. These benefits include increased efficiency within the agencies, savings to businesses from recording data digitally and reduced time spent on submitting data returns, and savings to central government from reduced costs associated with building and running alternative IT solutions. All parties will also benefit from reduced waste crime.

132. Research and estimated costs (based on data in England only) from the Environmental Service Association have been drawn upon to improve our understanding of the scope for beneficial outcomes to different parties from reducing waste crime, and to help monetise some of the expected impacts of a central Digital Waste Tracking system for all waste. We have made a series of assumptions about the expected impact of reduced waste crime, developed in conjunction with the four nation regulators.

133. Digital Waste Tracking is expected to reduce several types of waste crime by increasing transparency, improving traceability and enabling more intelligence led intervention. As more waste is diverted from illicit channels into legitimate treatment facilities, tax receipts that were previously lost due to criminal activity return to the public sector (see UK Impact Assessment for further details).

134. Table 19 provides a summary of benefits to government from reduced waste crime. The information below explains how increased tax revenue has been estimated for each type of waste crime. In each case, tax revenue that should already have been received in the absence of waste crime. We expect these benefits to begin to be realised from 2028.

135. This is a transfer cost from businesses to government, but given that this cost should have been being paid by business under the baseline, we have excluded the equivalent monetised costs to businesses in the calculation of the NPV.

Landfill tax

136. Misclassification of waste can occur at any point in the waste management chain – either accidentally or deliberately. The financial implications of misclassification can be significant, for instance, waste classified as ‘inactive’^[43] is eligible for the lower rate of Landfill Tax, which, at £3 per tonne, is substantially lower than the standard rate of tax of £94.15 per tonne^[44].

137. It is expected that Waste Tracking for all waste under Option 3 will make it easier for regulators to identify misdescription. It will remove at least some, if not all, of the need for time intensive waste stream audits and the scanning of paper waste transfer notes on which misdescription work is currently based. Waste Tracking will enable better insight of waste being rejected at disposal sites due to misdescription and regulators will be able to follow up with the parties involved much more effectively as a result of the improved information they will have from the Waste Tracking service.

138. To estimate additional landfill tax revenue expected from reduced misclassification of waste we have developed three estimates (low, central and high) largely based on published evidence and tax gap analysis.

139. We calculated a low annual estimated benefit of £15m per year, central estimate of £26.45m per year, and high estimate of £27.7m per year across the UK. The central estimate, uplifted to 2026 prices, is used in the headline results. The low and high estimates are presented as sensitivity bounds. For further detail see the UK Impact Assessment.

Reduction in Illegal waste sites and waste permit breaches

140. Criminal activity can be perpetrated by individuals or organisations through a breach of an environmental permit or the operation of an illegal waste site. Examples include deliberately accepting too much waste, storing waste in an inappropriate manner or accepting waste that is not allowed under a certain permit.

141. By mandating that waste operators digitally record and submit their waste movements and transfers, the Waste Tracking service will make it harder for waste operators to run, or support, illegal sites (including waste sites breaching their permit conditions). In addition, a Digital Waste Tracking system for all waste will enable regulators to build a more complete picture of waste production at sites that do not hold environmental permits. This would enable regulators to carry out data analysis of entire sectors, and identify anomalous sites that are worthy of further investigation.

142. We expect that with a central Waste Tracking system in place, some waste that would have been handled on illegal sites will instead be handled by authorised facilities in the legitimate market – offering benefits to businesses through increased profit and therefore the government through increased taxation (VAT, corporation tax and landfill tax) and the regulator through more cost-efficient enforcement^[45]. Only public sector benefits are captured in this section.

143. In the absence of specific evidence on the impact that a Digital Waste Tracking service could have on illegal waste sites, we have reviewed outcomes from targeted interventions to reduce the number of illegal waste sites instead. A national digital waste tracking system has not previously operated in the UK, and therefore no direct empirical evidence exists on its impacts. Targeted intervention evaluations provide the closest available evidence base. This approach has enabled us to present a realistic minimum benefit that the government could expect to incur from reducing the number of illegal waste sites as a result of implementing a central Waste Tracking service.

144. We calculated a low annual estimated benefit of £0.79m per year and high estimate of £2.29m per year across the UK. The central estimate used in this impact assessment is the average of the low and high estimates, uplifted to 2026 prices.

Reduction in illegal waste exports

145. Whilst some wastes can be exported legally for recycling and recovery, it is illegal in almost all cases to export untreated waste from the UK for disposal^[46]. Understanding the scale of illegal waste exports is extremely difficult. Current data are unreliable and incomplete across the UK..

146. Waste Tracking will enable intelligence-led enforcement which we expect will deter operators from illegally exporting waste. In the absence of specific evidence on the impact that a Digital Waste Tracking service could have on illegal waste exports, we have reviewed targeted interventions to reduce illegal waste exports instead.

147. We calculated a low annual estimated benefit of £0.58m per year and high estimate of £0.72m per year across the UK. The central estimate used in this impact assessment is the average of the low and high estimates, uplifted to 2026 prices. There may be further benefits to the public sector from reduced illegal waste exports in the form of reduced repatriation costs. Waste Tracking will reduce the likelihood of illegal waste exports occurring in the first instance, and the regulator will have increased intelligence to identify the illegal operator(s) involved and to ensure that the repatriation costs are recuperated from the offending operator(s).

Reduction in fly-tipping

148. Fly-tipping is a wide-ranging offence, defined as the illegal deposit of household, industrial, commercial, or other ‘controlled’ waste without an appropriate waste management authorisation. In many instances it is an opportunistic, one-off occurrence, with perpetrators seeking to avoid waste treatment or disposal costs.

149. The Waste Tracking service will be able to directly address the fly-tipping of commercial waste, arising from construction, demolition, excavation, and other commercial activity. This is because all commercial waste will be tracked from where it is produced to where it is disposed of.

150. We calculated a low annual estimated benefit of £2.61m per year and high estimate of £8.14m per year across the UK. The central estimate used in this impact assessment is the average of the low and high estimates, uplifted to 2026 prices.

8.6 Benefits to Business: Reduction in waste crime

151. The benefits to businesses from reduced waste crime are based on the same sources described above (see Table 20). These savings to businesses are deemed to be ‘indirect’ on the basis that the additional profit to legitimate businesses is dependent on illegal businesses leaving the industry (freeing up the waste to be handled by a legitimate operator) or moving their business into compliance. To transition to operating legitimately or to accept waste that was previously handled illegally may require some changes to business activities and/or infrastructure. On this basis, the benefit may not be immediate and therefore we consider the benefit to be indirect.

Reduction in illegal waste sites and breaches of permits

152. Reduced illegal waste sites and breaches of waste permits will result in increased profit for legitimate operators. Illegal operators avoid key costs, such as landfill tax, permit fees, and compliance requirements, which allows them to undercut compliant businesses. By improving traceability and making non-compliant activities harder to conceal, Digital Waste Tracking reduces the viability of illegal operations and shifts more waste into legitimate market. As a result, authorised operators gain additional waste volumes and face less unfair price competition, leading to higher revenues and improved profitability across the compliant sector.

153. The methodology for estimating the number of illegal waste sites closed and the annual volume of activity affected is identical to the approach used in the public sector benefits section. We calculated a low annual estimated benefit of £0.001m per year and high estimate of £0.012m per year across the UK. The central estimate used in this impact assessment is the average of the low and high estimates.

Reduction in flytipping

154. Reducing commercial fly-tipping is expected to increase profits for legitimate operators. When businesses or contractors avoid disposal costs by illegally dumping waste, compliant operators lose potential revenue from lawful collection, treatment and disposal of waste. By improving traceability and making it harder for waste to disappear from the system, Digital Waste Tracking reduces opportunities for fly-tipping. As more commercial waste is routed through authorised facilities instead of being dumped illegally, legitimate operators benefit from higher waste volumes and increased income.

155. The private sector benefits from reduced fly tipping are estimated using the same underlying assumptions as the public benefits. We calculated a low annual estimated benefit of £14.21m per year and high estimate of £44.29m per year across the UK. The central estimate used in this impact assessment is the average of the low and high estimates, uplifted to 2026 prices.

8.7 Benefits to Business: Savings from no longer needing to submit waste returns

156. We expect that there will be savings to waste operators from no longer having to submit waste returns. Under Option 3, regulators will remove quarterly site returns from 2028 and the Digital Waste Tracking service would capture end-to-end data on waste movements, including both inputs and outputs from waste sites. This provides the same information currently collected from these quarterly returns, allowing those returns to be removed by regulators. In contrast Option 2 only captures data on waste received at sites and does not provide visibility on waste movements or outputs, meaning waste returns would still be required and cannot be removed under that option. This has been discussed with regulators.

157. To estimate this saving, we engaged with the Waste Tracking user panel. We asked the panel how long they currently spend submitting permitted site returns and waste exemption returns and how often they submit these. The responses were analysed and significant outliers were removed.

158. Using the median wage for workers in waste disposal (£20.72, from the Annualised Survey of Hours and Earnings^[47]) and inflating this by 1.5% per annum to project wage rates from 2023 onwards, and then inflating this by 22% to include non-wage costs, we obtained the estimated savings from no longer needing to submit Permitted and non-hazardous waste exempt site returns (see Table 21).

8.8 Benefits to society and the environment

Reductions in waste crime

159. Illegal waste sites can blight local communities through the release of foul odours, pollution of surface or ground water, noise and dust from vehicle movements or on- site operations, or smoke from fires^[48]. Benefits associated with a reduction in disamenity are summarised in Table 22.

160. Illegal Sites. We calculated a low annual estimated benefit of £0.65m per year and high estimate of £1.89m per year across the UK associated with a reduction in illegal waste sites. The central estimate used in this impact assessment is the average of the low and high estimates.

161. Flytipping. The ESA’s Rethinking Waste Crime report^[49] estimates that fly-tipping has an annual cost to wider society of £16.8m (2020 prices, UK-wide cost) from carbon impacts. Based on the same underlying assumptions used in the public and private methodology, we calculated a low annual estimated benefit of £0.09m per year and high estimate of £0.27m per year across the UK. The central estimate used in this impact assessment is the average of the low and high estimates.