From 1 April 2022 a new tax on plastic packaging was introduced, affecting manufacturers and importers of plastic in the UK.
The aim of Plastic Packaging Tax is to encourage businesses to use recycled plastic, thus increasing its demand and incentivising more plastic to be diverted from landfill and incineration to be recycled.
Who will Plastic Packaging Tax apply to?
Plastic Packaging Tax applies to ‘persons acting in the course of a business’ who manufacture or import 10 or more tonnes of plastic packaging over a 12-month period or expect to do so in the next 30 days. It does not apply to packaging which is made of at least 30% recycled plastic.
Registration
Where 10 or more tonnes of plastic packaging has been manufactured in last 12 months, the business becomes liable from first day of next month and must register by the first day of the subsequent month.
Where the 10-tonne threshold is expected to be met in next 30 days, registration is required within 30 days of the first day that this condition is met.
Although exempt from the charge, packaging which is made of at least 30% recycled plastic still counts towards the 10-tonne registration threshold.
Where conditions are met, registration is required even if the business is not chargeable.
Which products does it apply to?
Plastic Packaging Tax only applies to ‘finished’ products i.e. those which are suitable for use, either alone or in combination with other products, for containment, protection, handling, delivery or presentation of goods at any stage in the supply chain. A key point to note here is that it doesn’t matter whether the packaging is produced/imported for use as part of a supply chain or by an end-user.
This is a wide definition, meaning it will catch unexpected items such as coat hangers, as well as reusable and refillable items such as plastic crates and intermediate bulk containers (IBCs). The tax will also apply to packaging which already contains goods such as plastic bottles, and packaging around goods.
Individual components need to be considered separately e.g. for a plastic drinks bottle, the bottle itself, the lid and any plastic label are separate. If packaging is made of multiple materials, where plastic (by weight) is the predominant component, the whole item of packaging is deemed as plastic.
Exclusions
There are exclusions for products which are:
- used for packaging of licensed human medicine – exempt but counts towards 10-tonne threshold;
- permanently recorded as set aside for non-packaging use – exempt but counts towards 10-tonne threshold. Examples: plastic film to coat whiteboards, film to enable the fermentation process to take place to make silage. This is a small and highly specialised exemption;
- used as transport packaging to import multiple goods into the UK – exempt and does not count towards 10-tonne threshold; and
- used in aircraft, ship, and rail goods stores – exempt and does not count towards 10-tonne threshold.
In addition, there is also an exclusion for three types of products. These do not need to be included when determining if the 10-tonne threshold is met. These exclusions are for products which are:
- used in the long-term storage of goods
- eg. they can be re-used for storage of the same/similar goods. The packaging function is secondary to its storage function
- Examples: toolboxes, first aid boxes, headphone cases
- not applicable to any packaging which is expected to be discarded after the goods within have been consumed
- an integral part of the goods
- eg. the goods cannot be used without the component, and the component is expected to be discarded once the goods have been used
- Examples: water cartridge filters, printer or toner cartridges, inhalers, teabags
- not applicable to plastic packaging in place when the product is sold, which does not stay in place while the product is used (such as a film wrap on a CD case)
- A packaging component is not an integral part of the good where it performs a packaging or storage function e.g. a ready meal tray is not integral to the meal, as it provides packaging, and the food can be heated and eaten in another dish.
- reused for the presentation of goods
- eg. packaging designed for the presentation of goods to a consumer or user
- Examples: sales display shelf, shop fittings, sales presentation stand
Exported packaging
Where packaging is due to be exported, Plastic Packaging Tax can be deferred for up to 12 months. If the packaging is exported within 12 months, the liability for PPT is cancelled.
Compliance
Plastic Packaging Tax will be charged at a rate of £210.82 per metric tonne (was £200 pre-1 April 2023, although all weights must be measured in kilograms. A return documenting the total weight of finished plastic packaging components manufactured in / imported into the UK in the accounting period will need to be prepared every quarter. The quarter dates are:
- 1 April to 30 June
- 1 July to 30 September
- 1 October to 31 December
- 1 January to 31 March
The return must be submitted, and the tax paid no later than the last working day of the month following the end of the quarter being reported.
Need help?
Please contact us if you are unsure if you would like further information on any of the points raised above.