New tax on plastic packaging to boost use of recycled plastic – the 5 things you need to know
1st April 2022 will see a new plastic packaging tax (PPT) being introduced in the UK targeted at manufacturers and importers of plastic packaging. If this will impact on you, here is what you need to know.
- Why it is being introduced
Essentially the government wants to offer a financial incentive to reduce the use of new plastic and increase levels of plastic recycling. In fact, the government estimates that this ‘environmental’ tax could boost the use of recycled plastic in packaging by around 40%. This is equal to carbon savings of nearly 200,000 tonnes in 2022 to 2023, based on current carbon factors*.
Whilst providing a clear economic incentive for businesses to use recycled plastic, it is hoped it will stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.
- The detail
PPT will be levied on any plastic packaging that contains less than 30% recycled plastic and will be applicable on packaging manufactured in or imported into the UK, whether the packaging is unfilled or filled.
Further details include:
- Even though the tax is designed to have environmental benefits, plastic in this context includes biodegradable, compostable and oxo-degradable plastics.
- Plastic packaging manufactured or imported for use in the immediate packaging of a medicinal product is exempt from PPT. Veterinary medicines however are covered by PPT.
- Each component of the packaging needs to be considered separately. For example, using a plastic drinks bottle as an example, you would need to consider the bottle itself, the lid, and any plastic label separately.
- Packaging that contains multiple materials but contains more plastic by weight than any other single substance will be a plastic packaging component for the purposes of the tax. For example, if a 10-gram item of packaging is made up of four grams of plastic, three grams of aluminium and three grams of cardboard, all 10 grams will be considered plastic packaging for the purposes of the tax.
- The rate of PPT will be £200 per metric tonne of plastic packaging.
- Who will pay
Manufacturers or importers of 10 or more tonnes (inclusive of plastic packaging which contains at least 30% recycled plastic) of plastic packaging over a 12-month period must register for the tax.
Penalties will apply for failing to comply with a relevant PPT requirement e.g., keeping records and payment, which will be an initial fixed £500 plus a daily £40 penalty for continuing failures to comply. Severe criminal penalties could arise in cases of fraudulent evasion of PPT.
- What action to take
Now is the time to start becoming familiar with the new rules and considering the steps you need to take in terms of your liability, responsibility for compliance, training for staff, registration with HMRC, and developing the required reporting framework to complete tax returns.
HMRC has published guidance on how to register for PPT – although this cannot be done until 1 April 2022.
- The impact on business
The tax is expected to impact on an estimated 20,000 manufacturers and importers of plastic packaging. The initial admin burden should not be underestimated. More record keeping will be required so it is vital to have the right internal systems in place in time. You will also need to consider who is going to bear the cost of the liability. You or your customers?
The new legislation has increased demand for recycled polymers and therefore driven up the price of waste plastic. This means that some grades that were previously not cost effective to recycle are now in demand.
If you would like to get competitive offers for your grades of waste plastic call us on 01937 520306 or email firstname.lastname@example.org.
HMRC has published general guidance on getting your business ready for PPT which is also a great source of information and includes what records and accounts you need to keep and what due diligence you will need to carry out.