Companies that cause pollution by dumping waste or sewage will face fines of up to £3m under fresh guidelines issued by the Sentencing Council.

The recommendations to judges and magistrates for higher sentences for serious offenders are included in the council's first review of regulations governing disposal of rubbish.

The guidelines have been introduced to rectify a perceived lack of familiarity, particularly among magistrates, with sentencing for environmental offences.

The council, which ensures that courts across England and Wales adopt a uniform approach, concluded that the levels of fines being imposed were often too low and did not reflect the seriousness of the damage caused to the environment.

Under the 1990 Environmental Protection Act, companies can theoretically face unlimited fines but most of the punishments handed down by the courts have been well below £1m. The Sentencing Council's recommended range for firms found guilty of illegal discharges runs from £100 up to £3m in the crown court.

Among the aggravating factors that judges and magistrates should take into account are whether there has been a history of non-compliance with previous warnings from a regulator and whether the pollution was near homes, schools or environmentally sensitive sites.

The council said: "[These changes] encourage magistrates to make more use of the highest levels of fines for some of the more serious offences that come before the courts. Corporate offenders committing serious offences, who are likely to be those causing most damage or risk to health, are expected to get higher fines."

In two recent cases that reached the court of appeal, the operators of Sellafield were fined £700,000 and Southern Water was ordered to pay £200,000. Sellafield Ltd was fined for sending four bags of low-level radioactive waste to a landfill site. Southern Water was punished for pumping raw sewage into the sea near Margate.

The sentencing recommendations cover offences involving the mishandling of waste or where a company or individuals cause pollution or harm to people's health, or the risk of it. Rubbish tip operators who do not store barrels of chemicals properly so that they leak into the surrounding area are likely to face stiffer fines.

The Sentencing Council's recommendations also cover lower level offences such as fly-tipping by individuals who abandon tyres in a field or a householder dumping an old mattress in an alleyway.

"There are unlikely to be significant changes to penalty levels for lower level offences," the council said. "The overall proportions of offenders receiving the various types of sentence such as fines, community sentences, discharges and prison sentences, are expected to remain the same."