Plastic Packaging Tax

From 1 April 2022, the UK government is introducing the Plastic Packaging Tax (PPT) as an economic incentive for businesses to use recycled plastic and stimulate recycling and collection of plastic waste. It will be due on finished packaging that is predominantly plastic by weight, whether filled or unfilled, and does not contain at least 30% recycled plastic. The tax rate will be £200 per tonne.

According to HMRC, about 20,000 manufacturers and importers of plastic packaging businesses will be affected.

The impact of PPT is expected to be high. Businesses will need to make arrangements to understand and comply with the new rules, register with HMRC, train their staff, develop a reporting framework to complete and submit tax returns whilst also maintaining appropriate records and making amendments including those required to claim the export credit.

You can find out more on the Government Website here

From 1 April 2022, registration will be required for businesses that have manufactured or imported 10 tonnes or more of finished plastic packaging components within the last 12 months or expect to do it in the next 30 days.

Three categories of packaging products are not chargeable because they are not classed as a packaging component in law. Four types of packaging articles are exempt. Some exempt packaging will count towards the 10-tonne threshold for registration, and some will not.

The PPT is supported by the draft primary legislation introduced in the Finance Act 2021. However, the secondary legislation will be adopted later, and the HMRC guidances on PPT may change accordingly.

Group PPT registration will be available for companies who are members of the group.

For exporting companies, an easement is stipulated in the form of tax deferment for up to 12 months if specific requirements are met and complete tax cancellation if the packaging is exported within the 12 months period.

Record keeping of plastic packaging is compulsory for all businesses that manufacture or import plastic packaging.

Companies that do not have liability to register must keep them to demonstrate to HMRC that they are not liable.

HMRC requires the records to reflect the following:

“total amount in weight and a breakdown by weight of the materials used to manufacture plastic packaging, excluding packaging which is used to transport imported goods;
data and calculations used to determine if a packaging component is, for the most part plastic, and how much recycled plastic it contains;
weight of exempted plastic packaging and the reason for the exemption;
amount in weight of plastic packaging exported, and therefore the allowed relief from the tax”.

Futher HMRC guidance is available here.

If you are affected by this new Plastic Packaging Tax please get in touch with Adam Wood who will be happy to advise.