Getting businesses ready for the Plastic Packaging Tax

13th May 2021

The new Plastic Packaging Tax will take effect from 1 April 2022 affecting any business that manufactures or imports plastic packaging, including plastic packaging around imported goods.

It aims to:

• encourage the use of recycled plastic rather than new plastic within packaging;
• stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.

New tax

The tax will apply to plastic packaging manufactured in, or imported into, the UK where the plastic used in the manufacturing is less than 30% recycled plastic. Packaging with at least 30% recycled plastic will be outside of the tax regime.

The rate of tax will be £200 per metric tonne of plastic packaging and will only apply to the finished plastic packaging itself. Where any plastic packaging is imported which already contains other goods (for example plastic bottles filled with drinks), the tax only applies to the plastic packaging itself. Importers will need to check whether they have all the information they need on the materials used to make the goods that they import.

An online service to register and pay will be available when the tax takes effect and businesses will need to have the information needed to establish how much tax they will need to pay or confirmation there is nothing to pay.

Recordkeeping

Records will need to be kept by all businesses that manufacture or import plastic packaging, even if it is less than 10 tonnes per year. Plastic packaging will be assumed to not meet the recycled content test unless it can be shown that it does.

Businesses that manufacture or import 10 or more tonnes of plastic packaging over a 12-month period will need to register for the tax even if the packaging is more than 30% recycled plastic and regardless of whether there is any tax to pay.

Businesses will need:

• to know how much recycled plastic is in the packaging they manufacture or import, any exemptions that apply and evidence of this;
• to account for the tax on plastic packaging that is supplied to businesses, if not, those businesses may be found to be secondarily or jointly liable for unpaid tax with the supplier;
• to check that goods bought in plastic packaging on which tax is to be paid has been properly accounted to avoid tax liability;
• Any invoice issued to a business customer to show a statement that Plastic Packaging Tax has been paid on the packaging concerned.

Exporters

For goods intended for exporting, payment of the tax can be deferred for up to 12 months from the point of manufacture or import. Tax will not need to be paid if the goods are exported within that 12 month period. There may be possibility to credit the tax liable to pay, where packaging is exported.

Sufficient recordkeeping should also be kept to:

• support the tax deferral claim on goods intended for export;
• ensure a credit can be claimed should goods be subsequently exported further down the supply chain.

Exemptions

There are 4 exemptions from the tax, regardless of how much recycled plastic they contain:

• plastic packaging manufactured or imported for use in the immediate packaging of a medicinal product;
• transport packaging used on imported goods;
• packaging used as aircraft, ship and rail stores;
• components that are permanently designated or set aside for use other than a packaging use.

Comment

You should read the guidance available on GOV.UK if your business:

• manufactures or imports plastic packaging, including packaging made of bio-based plastics and plastic packaging around imported goods, such as plastic bottles full of drinks;
• buys plastic packaging (or goods that are supplied in plastic packaging);
• expect your plastic packaging to already contain 30% or more recycled plastic, or be exempt from the tax;
• exports plastic packaging or goods in plastic packaging from the UK.

Please contact Ben Sheppard or your usual Walker Morris contact if you would like any advice or guidance on the plastic packaging tax.