17 January 2022
Get ready for the Plastic Packaging Tax
Businesses which manufacture or import plastic packaging, including packaging which already contains goods, have some steps to take now to prepare for the new Plastic Packaging Tax which comes into effect from 1st April 2022.
The tax will be introduced to encourage the use of recycled plastics in packaging rather than newly manufactured plastics. It is hoped that this will stimulate increased recycling of plastics to avoid using landfill or incineration for disposing of plastics where recycling is a viable alternative. Packaging may contain recycled materials where current regulations permit. For example, some food safety regulations do not allow recycled packaging for food products.
The primary legislation for the plastic packaging tax is before parliament at present, and is not yet law, therefore existing regulatory requirements must continue to be followed and the guidance surrounding the new tax is subject to change until such time as the legislation is passed as law. However, for businesses which are likely to be affected, it is worth taking time to prepare for the change now.
In operational terms, the tax will apply to any plastic packaging which has either been imported into or manufactured in the UK and where the plastic used is less than 30% recycled. The tax will be charged at a rate of £200 per metric tonne of packaging. HMRC recommends that all businesses that deal with plastic packaging either as a manufacturer or an importer keep records and prepare to register for the tax, even if the plastic they deal with is more than 30% recycled. This is because the legislation is not law yet, and the details could change.
Any business that imports or manufactures 10 metric tonnes or more of plastic packaging over a twelve-month period will be required to register for the tax, but registering doesn't mean that tax will be due. This criterion of 10 metric tonnes also applies to businesses which import packaging which already contains goods, such as drinks in plastic bottles, however it only applies to the plastic packaging, not the goods. HMRC will have an online service for registration and payment of tax which will become available on 1st April 2022 when the tax comes into effect.
Businesses that import or manufacture plastic packaging, even if this is less than 10 metric tonnes a year will need to keep records of the packaging manufactured or imported. All plastic packaging must be shown to meet the recycled content test as it will be assumed not to otherwise. Further information will be released later in the year as to exactly what records should be kept, especially for businesses importing or manufacturing less than 10 metric tonnes of plastic packaging.
For these businesses, the record keeping requirements are expected to be reduced, although the exact details of what to record will be confirmed. Businesses that supply recycled plastic can expect customers to want more information about the products supplied because of the new tax.
Since the tax is being introduced with the intention of encouraging the use of recycled plastics, businesses may want to prepare for the tax by starting to manufacture or import plastics which are more than 30% recycled now. Businesses can also begin to implement the necessary record keeping procedures now.
Records will need to contain enough information to establish the correct amount of tax due, or evidence that no tax is payable. It is also important to keep records up to date to check whether the business becomes liable for tax in the future. Businesses which import plastic packaging can also take this opportunity to check that they have all the information about what was used to make it.