Administration Costs and Unspent Funds

As the Regulator of the LCF, Entrust is tasked with overseeing the proper use of LCF funds. The main goals set by HMRC for EBs using LCF funds are: 

Keeping administrative costs low: EBs should spend no more than 7.5% of their project budget on administration. This includes all the costs of running their organisation and managing their projects. 

Reducing money left unspent: EBs should aim to lower the amount of unspent LCF money they have each year. 

To provide clarity on these matters, along with practical implications, we have elaborated on them further below: 

Keeping Costs in Check 

Environmental Bodies (EBs) utilising the Landfill Community Fund (LCF) must diligently monitor their expenditures. It's important for them to ensure that their operational costs, including office expenses and staff salaries, do not exceed 7.5% of the total amount spent on their environmental projects. 

Regulation 30(1) defines running costs as all expenses related to managing the EB and its assets. These costs need to be reasonable and directly connected to their LCF work. This includes: 

• Money EBs spend on their own approved LCF projects. 

• Money spent on projects approved for other EBs. 

• Funds EBs transfer to other EBs for LCF projects. 

Importantly, they shouldn’t be more than 7.5% of what the organisation spends on LCF projects in a year. 

What to Do with Leftover Money 

EBs may occasionally have remaining funds at the end of the year. In such cases they are required to state within their Annual Return whether these funds are committed to projects or retained for winding up, any other funds are classed as uncommitted.  

Current guidance requires that the total amount of money left over shouldn’t be more than one and a half times the EB’s LCF income for that year, including any contributions and transfers they received. 

Monitoring and Improving Compliance 

To meet these two objectives, Entrust implements a structured framework. Initially released in 2018 and updated in 2021, this framework is designed to oversee and regulate administration costs and the management of unspent funds. It relies on annual financial reports (Form 4s) submitted by Environmental Bodies (EBs). Available on our website, this framework serves as a tool to help EBs adhere to these financial guidelines. 

Reporting and Ensuring Transparency 

Entrust reports annually to HMRC on how well EBs are doing in managing their costs and unspent funds. This reporting is part of an effort to maintain transparency and efficiency in the use of LCF money.