Aggregates levy (AGL)
Our specialist team will guide you through the complex world of the Aggregates Levy (AGL).
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What is the Aggregates Levy (AGL)
The Aggregates Levy (AGL) was introduced on the 1st April 2002, it is a tax on commercial exploration or any rock, sand or gravel.
It is a one stage, non-deductible tax designed to incentivise recycling and reduce the use of virgin aggregate, so it does not apply to material which has previously been used for construction purposes. The person who commercially exploits the material has the primary obligation to register and account for the levy on each tonne exploited.
Commercial exploitation is defined in legislation as:
– Removing the material from its originating site
– Making material the subject of an agreement to supply (e.g. making a contract for a future supply of material)
– Using material for construction purposes
– Mixing material with anything other than water
Commercial exploitation can take place and create AGL liability even where there is no supply being made with the material, and no revenue received.
The scope of the levy includes aggregates dredged from the seabed within UK territorial waters.
Establishing the tax rates
A single rate of tax, currently £2.00 per tonne, applies to any commercially exploited rock, sand and gravel.
Materials consisting of more than half exempt substances are wholly exempt from AGL. These materials include; aggregate removed from navigation, material removed from the ground along the route of a new highway and railway.
Material, more than half of which consists of listed exempt substances, is wholly exempt from AGL. Exempt substances include; soil, coal, spoil from certain industrial processes and material extracted in certain utility works.
Where aggregate material is used otherwise than for its aggregate qualities, it may be eligible for AGL exemption, for example; in the manufacture of bricks.
Critical and contention points
There is no minimum threshold for registering for the AGL, anyone who commercially exploits taxable material has an obligation to notify HMRC.
HMRC’s definition of what constitutes ‘construction’ is quite broad. For instance, any rock, sand or gravel used to construct a bund is likely to be seen as being used for construction purposes and therefore subject to the AGL.
The weight of material being taxed need not include added water. Determining whether water is added and how much may be very cost effective.