This is a freeview 'At a glance' guide to Plastic Packaging Tax.

What is Plastic Packaging Tax? Who does it apply to? Are small businesses subject to Plastic Packaging Tax?

At a glance

  • Plastic Packaging Tax is due to take effect from 1 April 2022.
  • The tax will be £200 per tonne (apportionment for part thereof).
  • The tax applies to plastic packaging manufactured in or imported into the UK containing less than 30% recycled plastic when measured by weight.
  • It applies to businesses who manufacture or import plastic packaging components or import packaged goods into the UK.
  • 'Small operators’ who manufacture or import less than 10 tonnes of plastic packaging in a 12-month period are exempted from the charge. 
  • There are anti-avoidance rules dealing with the artificial separation of business activities to avoid the tax.

Overview

The legislation is included in sections 42-85 and schedules 9 -15 of Finance Act 2021. The relevant definitions are found in s47-49 and s83 and include:

  • Plastic: a material consisting of a polymer to which additives or other substances may have been added, with the exception of cellulose-based polymers that have not been chemically modified.
  • Packaging: all products made of any materials of any nature to be used for the containment, protection, handling, delivery and presentation of goods, from the producer to the user or the consumer. Non-returnable items used for the same purposes shall also be considered to constitute packaging.

Items which are designed for longer term and likely repeated storage by consumers, such as plastic storage boxes, will be excluded from the new tax.

  • Recycled plastic is plastic that has been reprocessed from recovered material by means of a chemical or manufacturing process, other than organic recycling, so that it can be used either for its original purpose or for other purposes.

What is the charge to tax?

The charge to tax will be £200 per tonne of qualifying plastic packaging produced or imported into the UK.  For any part of a tonne, the £200 charge will be apportioned. The amount of packaging will be measured and the tax paid by reference to accounting periods.

Who does it apply to?

Following consultation feedback, the government announced in the 2020 Budget that it would make certain changes, which are included in Finance Act 2021, to: 

  • Extend the scope of Plastic Packaging Tax to imported filled plastic packaging that does not contain at least 30% recycled plastic content, such as plastic bottles filled with drinks, rather than just imports of unfilled plastic packaging.
  • Exempt businesses that manufacture or import less than 10 tonnes of plastic packaging in a 12-month period from the requirement to pay the tax. This will ensure the administrative burden and cost of collecting the tax are not disproportionate to the environmental harms the tax seeks to address.

Further exemptions are available where the packaging:

  • Is used for the immediate packaging of medicinal products as defined by regulation 2 of the Human Medicines Regulations 2012 (S.I. 2012/1916).
  • Is used for transport packaging for imported goods.
  • Is packaging used as aircraft, ship and rail stores for international journeys.
  • Is for use other than as components that are permanently designated or set aside for use other than a packaging use, other than for the containment, protection, handling, delivery or presentation of goods.
  • Is exported unless as transport packaging for exported goods. Where tax has been paid and the related plastic components are then exported, credit or repayment will be available for the tax paid.

The HMRC guidance includes lists of plastic components which are not subject to the tax such as:

  • toolboxes
  • first aid boxes
  • glasses cases
  • CD, DVD and video game cases
  • water cartridge filters
  • printer or toner cartridges
  • inhalers
  • shop fittings

Who pays the tax?

  • Where the packaging or component is produced in the UK it is the producer (manufacturer) who pays the tax.
  • Where it is imported to the UK it is the person on whose behalf the packaging or component is imported who pays.

Care and due diligence will be required when there is a supply chain involved to establish who is liable to the tax.

Reporting

Businesses will be required to register with HMRC. The taxpayer will have 30 days ("the notification period") to notify HMRC of the need to register. The notification period starts when:

  • There is reasonable grounds to believe that in the next 30 days, the threshold of 10 tonnes will be surpassed.
  • The threshold of 10 tonnes was surpassed in the previous 12 months.

Opportunity

The new tax complements the reformed Packaging Producer Responsibility Regulations. It is hoped that all businesses, including small operators, will be encouraged to reconsider and redesign packaging, making it less difficult to recycle.

Any advance in science or technology in doing this may qualify for Research & Development relief.

Background to Plastic Tax

The first launch of plastic tax was in October 2015, when large retailers in England were required to charge a minimum of 5p for Single use carrier bags. Since then, the 2018 Budget announced its intention to introduce a new tax on businesses that produce or import plastic packaging which uses insufficient recycled content.

In July 2019, the Treasury published responses to its consultation on the proposed Plastic Packaging Tax. 

The tax is aimed at packaging producers and not end-users. 

Key features of the proposals:

  • This is a tax on unrecyclable plastic packaging content.
  • It appears unlikely to be applied to small producers.
  • Exporters may be given credit on the basis that the government does not wish to stifle business activity. However this is under consideration as there is also no desire to encourage environmentally unfriendly policies.

Useful guides on this topic

Plastic Packaging Tax policy design
Consultation following the 2020 Budget

Carrier Bag Tax
A 5p single-use plastic carrier bag tax was introduced in England in October 2015. From 21 May 2021, it was increased to 10p and extended to all retailers, regardless of size. 

Research and Development (R&D) Zone
Explore our R & D resources to see what relief you can claim, with worked examples and reporting templates.

External links

Finance Act 2021

HMRC Policy Papers: 

Consultation: Plastic Packaging Tax policy design

Plastic Packing Tax: a summary of responses

Plastic Packaging Consultation (closed)


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