Guide to plastic packaging tax

Guide to plastic packaging tax

The UK government is encouraging businesses and consumers to use less virgin plastic and reduce the plastic packaging manufactured not only in the UK but across the globe.

Plastic packaging tax is aimed at reducing plastic waste and the use of plastic packaging manufactured or imported into the UK. Businesses need to be aware of this tax is any point of their supply chain has plastic packaging components.

In this blog, we give you a comprehensive guide to plastic packaging tax and how to work out if you are liable to pay it.

 

What is the plastic packaging tax legislation?

A tax on plastic packaging was introduced in the UK on 1 April 2022.

Businesses that have plastic packaging components at any point in their supply chain should be aware of and potentially paying plastic packaging tax.

Where a packaging component is used in the containment, protection, handling, delivery, or presentation of goods at any stage it should be considered whether plastic packaging tax applies.

 

What is classed as plastic packaging?

For the purposes of plastic packaging tax, plastic means a polymer material to which additives or substances may have been added.

Cellulose-based polymers that have not been chemically modified, such as viscose, will not be treated as plastic for the purpose of plastic packaging tax.

Other cellulose-based materials which are chemically modified, such as cellulose acetate, will be considered plastic.

Additives include materials such as calcium or dyes. When you assess the amount of plastic in a packaging component, the additives are classed as part of the plastic.

Plastics include polymers which are:

• biodegradable

• compostable

• oxo-degradable

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.

You will need to keep records to show what substances are in plastic packaging.

 

Recycled plastic

If you produce plastic packaging components containing 30% or more recycled plastic, then then these are not chargeable for the tax.

However, those products containing 30% or more recycled plastic will still count towards the 10-tonne threshold for packaging you manufacture or import in a 12-month period.

For the purposes of plastic packaging tax, all plastic is assumed to be made using non-recycled (virgin) material, unless there is evidence that recycled material has been used, so it's important you keep accurate records and evidence.

 

Who is liable to pay UK plastic packaging tax?

Any UK business that does the following in the UK:

• imports plastic packaging

• imports products contained in plastic packaging or

• manufactures plastic packaging

will be liable to register for plastic packaging tax and pay any tax due if they exceed the threshold of 10 tonnes of plastic packaging in a 12-month period.

The tax affects a wide range of businesses due to its broad scope. It is anticipated that at least 20,000 businesses will be impacted.

Crucially, registration for plastic packaging tax will be required even if a business meets the 30% recycled plastic content threshold and does not need to pay any tax.

Non-compliance for a 12 month period could result in penalties of up to £15,000.

 

When do I pay plastic packaging tax?

Once you have registered with HMRC for Plastic Packaging Tax, you must submit a return and pay any tax due by the last working day of the month after the end of the tax period.

For example, your return and payment for the period 1 April to 30 June must be received by HMRC by the last working day of July.

 

What sectors are affected?

• Consumer goods

• Packaging manufacturing

• Industrial manufacturing

• Pharmaceutical

• Cosmetics

• Chemical

• Online retail

• Food and drinks online retail

 

How do you register for plastic packaging tax?

You must register with HMRC within 30 days of meeting the 10 tonnes threshold. If you don't register within this time, you may face a penalty from HMRC.

 

How is the plastic packaging tax calculated?

The tax will apply at a rate of £200 per tonne on chargeable plastic packaging.

 

What are the fines for non-compliance?

Failure to comply: If a business fails to comply there is a £500 fixed penalty and a £40 daily penalty for the period in which the business does not comply.

Non-compliance for a 12 month period could therefore result in penalties of up to £15,000.

Secondary liability and due diligence requirements: Even businesses who are not liable for plastic packaging tax should still carry out adequate checks on suppliers to ensure that plastic packaging tax is being paid in the supply chain where due.

If HMRC can to determine that a business either knew, or should have known that PPT was not paid, then the business could become liable for the tax even if they are not the primary payer.

 

Conclusion

How can we help?

1. We can assess the impact of PPT on your business and your supply chain– including tax advice on what is within the scope of the tax.

2. We can assist with the registration for PPT.

3. We can provide advice on the due diligence measures that your business needs to undertake to prevent exposure within the supply chain.

Contact our offices in Liverpool, Chester, Wirral and to understand how plastic packaging tax may affect your business.