Jurisdiction: United Kingdom

Commencement: 1st April 2022

Amends: New Legislation
Mini Summary

Detailed administrative requirements are set out for the Plastic Packaging Tax, which comes into force on 1st April 2022. Definitions are given to establish when a plastic packaging component is considered ‘finished,’ and therefore chargeable to the tax. It also details record keeping and weighing requirements and how to determine the recycled plastic content. The Plastic Packaging Tax only applies to packaging components containing less than 30% recycled plastic, however organisations that manufacture or import 10 or more tonnes of plastic packaging annually must register for the tax.

Summary

Part 2 of the Finance Act 2021 introduced the Plastic Packaging Tax and set out its framework and key definitions. Powers are also given to make secondary legislation that further set out the scope and procedures of the tax.

Exercising the powers of the Finance Act 2021, these Regulations put forward detailed administrative requirements for the Plastic Packaging Tax, which comes into force on 1st April 2022.

A plastic packaging component becomes chargeable to the tax when it is considered ‘finished,’ i.e. a finished product that was manufactured in the United Kingdom (UK), or imported into the UK.

A plastic packaging component is classed as finished after it has completed its final substantial modification.

Definition of substantial modification
Substantial modification is the final manufacturing process that changes the features of a packaging component. These include changes of its:

These manufacturing processes include:

The following are not considered substantial modification processes:

If multiple processes are carried out at the same time to finish a packaging component, and at least one is the last substantial modification process, then all other processes that are carried out at the same time would also be regarded as the substantial modification process.

If plastic packaging components are imported into the UK, and they have already undergone their final substantial modification process, they would be regarded as finished and would be chargeable to the tax.

Duties
There are various duties for organisations which can be read in The Legislation Update Service.


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Jurisdiction: United Kingdom

Commencement: 1st April 2022

Amends: New Legislation
Mini Summary

The aim of the Plastic Packaging Tax is to encourage the use of recycled plastic instead of new plastic material within plastic packaging. These Regulations define which ‘packaging components’ are subject to the Plastic Packaging Tax.

Summary

The Plastic Packaging Tax was introduced by the Finance Act 2021  to encourage the use of recycled plastic instead of new plastic material within plastic packaging. The tax will apply to chargeable plastic packaging components produced in the United Kingdom (UK) or imported into the UK by an organisation.
Definition of packaging components
Section 48 of the Finance Act defines packaging components as products that are designed for containing, protecting, handling, delivering or presenting goods at any stage in the supply chain from producer to user or customer; these can be either alone or in combination with other products.

An amendment to the definition of packaging components is necessary to ensure that the tax is properly targeted. Instead of an exhaustive list, the definition uses categories to describe the products, which will allow additional products to be added without the need for further legislation.

The definition is amended by the:


Removal of packaging product categories
The definition of ‘packaging component’ is changed by removing the following categories of packaging products that do not contribute towards environmental harm.


Packaging products that primarily provide a storage function
Packaging products that are mainly designed for long-term storage by consumers, and are suitable for re-use as storage for similar goods, are removed from the definition of ‘packaging component’. These products typically do not contribute to plastic pollution. Examples of these include:

For the full list of exceptions & exemptions, the full piece of legislation is available in The Legislation Update Service.


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If you are a UK producer or importer of plastic packaging, including an importer of plastic packaging that already contains goods (e.g. plastic bottles filled with drinks), you must prepare for it.
What is the plastic packaging tax?
Put simply, the Plastic Packaging Tax is a new environmental tax coming into effect on 1st April this year, to encourage the use of recycled rather than new plastic in plastic packaging for a more sustainable business practice. If you are a UK producer or importer of plastic packaging, including an importer of plastic packaging that already contains goods (e.g. plastic bottles filled with drinks), you must prepare for it.
Which plastic packaging is subject to the tax?
The new tax will be payable for chargeable plastic packaging components* produced in or imported into the UK by an organisation for commercial purposes. The rate of tax will be £200 per metric tonne (1,000 kg) of plastic packaging. (N.B. In the case of imported plastic packaging that already contains goods, the tax will only apply to the plastic packaging itself.)

*Chargeable plastic packaging components are finished plastic packaging components (meaning they have undergone their last substantial modification which is when they are packed or filled), with less than 30% recycled plastic when measured by weight.

A few examples of plastic packaging items that could be subject to the tax, depending on their recycled plastic content, are plastic: 

Some organisations may be exempt from the tax, however if the plastic packaging they produce, or import is for: 

Who needs to register for the tax?
You will need to register for the Plastic Packaging Tax if you have manufactured or imported 10 or more tonnes of plastic packaging within the last 12 months, or will do so in the next 30 days. But, keep in mind that you only need to pay the tax for chargeable plastic packaging components, so if your plastic packaging contains at least 30% recycled plastic, or is exempt from the tax, you will not have to pay.
Keeping records
Every manufacturer and importer of plastic packaging must keep records of the packaging they manufacture or import, even if they are not required to register or pay the Plastic Packaging Tax. This is to prove that their organisation is exempt.
When to submit a plastic packaging tax return
If you manufacture or import plastic packaging components, you will need to submit a tax return to HMRC every financial quarter, then pay any tax due no later than the last working day of the following month. Where plastic packaging intended for export is shipped within 12 months however, the tax liability will be cancelled.

These are the key things to know about for now, but further information on how to register for the tax, record keeping, and tax returns will be published by the Government within further regulations and guidance prior to April 2022, so keep an eye out for them in your register.