Is your business prepared for the new Plastic Packaging Tax?

From April 2022, Plastic Packaging Tax (PPT) will be in place in the UK (subject to final approval of the legislation by Parliament). The tax is being introduced to encourage the use of recycled rather than new plastic within plastic packaging.

If you manufacture or import 10 or more tonnes of plastic packaging within a 12-month period, you may need to register for this tax which will come into force on 1 April 2022 and will be charged at a rate of £200 per tonne of plastic packaging.

What is covered under the Plastic Packaging Tax?

The tax will apply to finished plastic packaging manufactured in, or imported into, the UK where the plastic used in its manufacture is less than 30% recycled. It will include:

• Plastic drinks bottles
• Ready meal trays
• Bubble wrap
• Sticky tape
• Re-usable plastic boxes
• Sandwich bags
• Bin bags

When do I need to register?

Registrations can’t be submitted until 1 April 2022 but we recommend that businesses start reviewing plastic packaging production or supply chains now to consider if they will need to register for PPT.

You will need to keep evidence to confirm the quantities of plastic packaging so that this can be verified by HMRC. Such records include:

• 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

Are there any exemptions to PPT?

There are four groups that are exempted from the tax.

These are:

1. Transport packaging used when importing goods into the UK.
2. Plastic packaging used in aircraft, ship or railway stores for international journeys.
3. Plastic packaging produced or imported for use in the immediate packaging of a human medicine.
4. Components permanently designated or set aside for non-packaging use.

What can I do to prepare?

For businesses who expect to be subject to this tax we recommend that you review contracts with suppliers and customers now and consider whether contracts will allow you to charge PPT on to your customers from 1 April 2022.

If you don’t take this into account, you could suffer additional costs.

Further, buyers of packaging from UK companies might be considered jointly liable for the tax if HMRC believes that the buyer was aware the tax was not paid at the correct time. So, you should consider how you can be sure that your supplier has correctly accounted for PPT.

The full guidance on PPT can be found on the government website.

If you would like to discuss PPT and how this it might impact your business, please get in touch with us.