The Plastic Packaging Tax – what you need to know

Samantha Stent, tax advisory manager at Scrutton Bland, explains how the Plastic Packaging Tax will work for businesses.

The Plastic Packaging Tax (PPT) will come into effect on April 1, 2022. It aims to encourage the use of recycled plastics and other environmentally-friendly materials by imposing a tax on plastic packaging manufactured in the UK and also on packaging imported into the UK. 

Plastic packaging is packaging that is predominantly plastic by weight. The new tax will not apply to any plastic packaging which contains at least 30% recycled plastic. The definition of “plastic packaging” is wide, and includes single-use plastic items such as bin liners, plastic cups and glasses, sandwich bags etc. 

Samantha Stent, tax advisory manager at Scrutton Bland - Credit: Scrutton Bland

Plastic Packaging Tax of £200 per metric tonne will be due on finished plastic packaging components manufactured in, or imported into the UK, in which less than 30% of the plastic is recycled. This includes imports of packaging which already contain goods, such as plastic bottles filled with drinks.  

Anybody who manufactures or imports 10 or more tonnes of plastic packaging over a 12-month period is required to register for the PPT.  This test is based on the total weight of plastic packaging, even where some of the packaging may well be recycled or exempt and ultimately falls outside of the tax charge.   

Plastic packaging which contains at least 30% recycled plastic, or packaging which is exempt from the tax for other reasons must still be included in working out if a business must register for the tax. So, all items, even those that are ultimately exempt, must be tracked, weighed and recorded before any exemption is applied. 

The intention seems to be that all major manufacturers and importers will end up registering and will then be left to establish which element of their packaging should fall outside of the charge.  As a result, the compliance burden is significant and falls entirely on the taxpayer.  

The tax will apply not just to producers or importers of the packaging components but also businesses involved in transporting, storing and selling the products, which can be made secondarily liable for the tax where it knows (or ought to know) that PPT has not been paid. 

For imported plastic packaging, details of its recycled plastic content must be obtained from the overseas manufacturer by the liable business in the UK. 

The important message is that even if you don’t have to register for the tax, you still need to keep records of your plastic packaging so that you can prove to HMRC that you have no obligation to register.  Also note that there is no exemption for SMEs and small businesses. 

More information on this can be found at www.scruttonbland.co.uk/news-views/ or contact Samantha Stent for advice.