A new tax, Plastic Packaging Tax (“PPT”), is being introduced in the UK with effect from 01 April 2022 aimed at reducing single use plastic and encouraging the use of recycled plastic. In effect, it is an environmental tax that aims to change behaviour and increase recycling.
Plastic packaging is defined as packaging that is predominantly plastic by weight. PPT will apply to plastic packaging manufactured in, or imported into, the UK that does not contain at least 30% recycled plastic. Imported packaging will be subject to PPT whether it is filled or unfilled. This measure is likely to have an impact in many sectors including manufacturing, consumer goods, food and drink and online retailers.
PPT will be payable based on weight and the rate will be £200 per tonne.
Manufacturers or importers of plastic packaging that have manufactured or imported more than 10 tonnes in any 12 month period or less as at 01 April 2022, or who plan to do so in the next 30 days alone from that date, must register for PPT with effect from 01 April 2022. In order to register, businesses simply notify HMRC in writing and they will then be given a unique reference number. All businesses breaching the threshold must register for PPT whether any tax is payable or not and therefore a large number of businesses are expected to be affected.
PPT is payable on the date that the packaging is finished or imported. Once registered for PPT, a business must submit Returns for calendar quarters and any tax must be paid with 30 days of the quarter end.
If the finished or imported plastic packaging is exported within 12 months, or converted into different packaging, then it is possible to claim a credit or relief from PPT.
In addition, there are four categories of packaging exempt from the tax. These are products designed to be:
The first two categories above, while not incurring PPT, do count towards the 10 tonne registration threshold. Therefore, if a business manufactures or imports more than 10 tonnes of packaging in either category, they must still register for PPT.
A further exemption from payment of the tax also applies to products which are designed to be:
The exemptions need to be reviewed to ensure compliance with the tax and may not be as widely interpreted as some may think.
As with any tax, businesses will need to consider their packaging strategy in the build up to the tax taking effect. Some of the issues/questions that businesses need to address are: