The UK Plastic Packaging Tax: What You Need to Know

On April 1st, 2022, a new tax on plastic packaging will come into effect in the UK, known as the UK Plastic Packaging Tax (PPT). This affects businesses that manufacture or import plastic packaging, including the import of packaging which already contains goods (such as plastic bottles). Businesses that will be affected by this change should start preparing now.

The aim of the legislation is to encourage the use of recycled plastic and to stimulate levels of recycling and plastic waste collection so that plastic waste is diverted from landfills and incinerators.

The tax will be charged at a rate of £200.00 per tonne. However, calculating the tax isn’t straightforward. You need information from your supplier to help you identify on which products tax has already been paid or what the recycled plastic content of an item is. For example, if you’re importing a plastic bottle (filled or empty, you’ll need to calculate the tax you’ll pay on the cap, label, and the bottle itself.

PPT is already enshrined in UK law. It forms Part Two of the Finance Act of 2021. Legislators will introduce secondary laws later this year.

How will the PPT work?

The PPT will apply to plastic packaging manufactured in, or imported into, the UK where the plastics used in packaging manufacturing is less than 30% recycled. Plastic packaging is assumed to not meet the recycled content test unless you can prove otherwise.

If you’re a business that manufactures or imports 10 or more tonnes of plastic packaging over a 12-month period, register for the tax. Registration is necessary even if all the packaging you manufacture, or import contains more than 30% recycled plastic.

What if your manufactured or imported plastic packaging is less than 10 tonnes a year? You’ll still need to keep records regarding these goods.

What steps do you need to take to prepare for the PPT?

The tax takes effect on April 1st, 2022. The online service to register and pay will be available on that day. This tax will create an additional burden on businesses, so it’s important to start preparing now.

If you are a business that buys plastic packaging on which the tax should have already been paid, you may need to check that this is being properly accounted for to avoid the possibility of being held liable for any unpaid tax yourself.

If your goods are intended for export, you can defer paying the tax for up to 12 months from the point of manufacture or import.

If you are a non-resident taxpayer that imports more than 10 tonnes of plastic packaging in a year (meaning the packaging is imported into the UK on your behalf), including plastic packaging that contains more than 30% recycled plastic or is exempt from the tax, you will still need to register and account for any tax due. If you import less than 10 tonnes of plastic packaging in a year, you will still need to keep some records to show this.

In general, you will need to keep records, including receipts and sales, to support claims to PPT relief and reclaims on PPT where applicable, complete multiple calculations and, if you are a business that manufactures or imports 10 or more tonnes of plastic packaging over a 12-month period, register for the tax. Registration is necessary even if all the packaging you manufacture, or import contains more than 30% recycled plastic. To learn more about the PPT, including how to prepare for it, mitigate the risks of non-payment, and maximize savings opportunities, contact Livingston.