Plastic Tax UK: Discover the new Plastic Packaging Tax

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From 01st April 2022, manufacturers and importers of plastic packaging that contains less than 30% recycled plastic will be subject to a Plastic Packaging Tax (PPT). As per HMRC’s policy paper the principal objective of this tax is to act as an economic incentive to encourage the manufacture and use of recycled plastic by businesses. This aims to boost the demand for such material and “stimulate increased levels of recycling and collection of plastic waste”.

Who does the new Plastic Tax UK apply to?

The tax is currently set at £200 per ton and applies to manufacturers and/or importers of finished plastic packaging components. To those businesses for which the tax will apply, they will need to register for Plastic Packaging Tax (PPT) once they have imported 10 tons of plastic packaging in the last 12 months or will do so in the next 30 days.

For manufacturers of plastic packaging, the business that undertakes the last substantial modification before the packing or filling process will be liable for the new Plastic Packaging Tax. Due to those new legislative developments, Tax and Finance planning became even more important nowadays.

What is considered Plastic in this new Plastic Tax in UK?

If a plastic packaging component is made from multiple materials but contains more plastic by weight (including additives which form part of the plastic) than any other substance, it will be classed as a plastic packaging component for the purposes of the tax.

There are exemptions and exclusions for certain packaging but crucially some of these need to be included in working out the weight as they will still count towards the threshold, despite not being subject to the tax.

When is the right time to register for the new Plastic Tax UK?

Providing that the type of plastic is considered subject to the tax, registration will be open from 01st April 2022 and the liability to register will depend on when you’ve manufactured or imported 10 or more tons of finished plastic packaging components within the last 12 months or intend to in the next 30 days.

Considerations for businesses according the new PPT

PPT is being implemented rapidly across the EU, so businesses need to not only look to their compliance obligations in the UK, but also to the member states.

Businesses will need to carefully assess which of their products and components will be subject to the tax and understand which of them count towards the 10-tonne threshold for registration.

If a business is liable to register it must ensure that the correct accounts and records are kept and assess the need for any potential system changes to meet reporting requirements. For those businesses that would be exempt from PPT, they must be sure to hold supporting evidence.

Additionally, any business involved in the supply or manufacture of plastic packaging that would be subject to PPT should carry out due diligence checks they are not involved in a supply chain where any tax due goes unpaid.

How can we help?

Our tax compliance team can help you to understand PPT, assess the impact it will have on your business, ensure you are fully compliant and work with you to overcome any challenges this new tax presents.

HMRC Policy Paper

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