Is your business ready for the Plastic Packaging Tax? Here is what you need to know

What is the plastic packaging tax?

The Plastic Packaging Tax is a tool that is implemented by the HM Revenue and Costumes that encourages the use of recycled material in plastic packaging. Overall, the aim is to create a positive impact on the natural environment by reducing the processes of landfill and the incineration of plastics.

From 1 April 2022, certain plastic packaging material manufactured in and imported to the UK would be taxable.

Would your business be affected?

Firstly, are you a manufacturer or importer of 10 or more metric tonnes of plastic packaging over a 12-month period?  Does your business produce or import any plastic packaging that contains less than 30% of recycled plastic? If the answers to these questions are ‘yes,’ then you are liable to pay the tax.

Though the criteria seem straightforward, there are a few yet important details that should be noted. For example, manufacturers and importers of less than 10 tonnes of plastic packaging a year would be exempted from paying the tax but would still need to keep records. These records are expected to be simple and only serve to prove that your business falls under 10 tonnes of plastic packaging a year.

Also, if the plastic packaging you import or manufacture contains more than 30% recycled plastic, you will still need to register if you import or manufacture over 10 tonnes of plastic packaging annually.

This tax also applies to imported packaging which already contains goods such as drinks. In this case, the tax only applies to the actual plastic packaging.

How to prepare your business

It is also important to note that the Finance Act 2021 is the primary legislation that has introduced the tax and associated duties, however further regulations are expected to provide more detail on the duties in the coming months, which we will notify you of as they are published.

It is important to know that your business may be exempt from the tax if the plastic packaging contains:

  • transport packaging;
  • Medical packaging;
  • Packaging that are used for rail, road, ships and air containers; and
  • Materials that are permanently designated for use other than packaging.

For now, if you are certain that the Plastic Packaging Tax applies to you and that this tax has a significant impact on your business, you may consider if any changes could be done to reduce the impact. For example, is it possible to increase the recycled content of the plastic packaging to over 30%? Is sourcing alternative products an option? Ideally, you should start asking these questions now.