Get ready for the Plastic Packaging Tax

19/01/2022

If you import or manufacture any plastic packaging, including pre-packaged goods, you need to know about the new Plastic Packaging Tax (PPT).

Even if you are a manufacturer or importer and do not have to pay the tax, you will likely be subject to stringent and time-consuming new administrative requirements.

With just a few months to go before the PPT requirements come into force on 1 April 2022, businesses that manufacture or import plastic packaging must make sure they are clear about the rules and able to comply.

To help with this, we have answered some of the most common questions about the PPT:

What is the PPT?

The PPT is a £200 per tonne tax on the import or manufacture of any plastic packaging that does not meet the threshold of containing at least 30 per cent recycled materials by weight.

The tax will apply both to empty packaging and to the import of pre-packaged goods, such as plastic bottles filled with drinks.

Will the PPT affect my business?

If your business is involved in the manufacture or import of any plastic packaging, the PPT is likely to affect you in some way.

The new £200 per tonne tax will only apply to businesses that import or manufacture 10 tonnes of plastic packaging or more per year and only if any of that packaging contains less than 30 per cent recycled materials. The £200 tax will be pro-rated for part tonnes of plastic packaging containing less than 30 per cent recycled materials.

However, the most significant impact of the PPT is likely to be the administrative burden it creates.

All businesses importing or manufacturing 10 tonnes of plastic packaging or more per year will need to register for a new online service, even if all that packaging meets the threshold of 30 per cent recycled materials or more.

Moreover, all businesses that import or manufacture any plastic packaging will need to keep records, irrespective of whether they meet the 10 tonne or 30 per cent recycled contents thresholds.

Finally, even if you neither manufacture nor import plastic packaging, you may notice increased costs for any plastic packaging you use or for any products you buy or sell that come in plastic packaging.

What is considered as plastic packaging?

HMRC’s definition encompasses any packaging components where the weight of the plastic used is greater than the weight of any other single element. So, the entire weight of a plastic blister pack with a cardboard backing would be affected by PPT if the plastic weighs more than the cardboard. However, none of it would be affected if the cardboard weighs more than the plastic.

Importantly, HMRC’s definition of plastic includes plastics that many people would consider environmentally friendly, including biodegradable, compostable and oxo-degradable plastics.

What is considered as recycled plastic?

HMRC says any plastic that has been reprocessed through chemical or manufacturing methods is recycled. However, organically recycled plastic is specifically excluded from the definition.

Are there any exemptions?

Yes, there are several key exemptions to the tax, including packaging:

• Used as transport packaging on imported goods.
• Used in aircraft, ship and rail goods stores.
• Used in the immediate packaging of a medicinal product.
• That are permanently designated or set aside for use other than for a packaging use, such as toolboxes, first aid boxes or CD cases.

The latter two categories should still be included in the 10-tonne threshold calculation, even though no tax will be due.

What if I export the packaging?

There will be reliefs available for packaging that is exported within 12 months of manufacture or import.

What records do I need to keep?

All businesses importing or manufacturing plastic packaging will need to keep documents recording:

• The total weight of plastic packaging manufactured or imported
• A breakdown by weight of the materials used in the manufacture of the packaging
• The information and calculations you use to decide if packaging is mostly plastic and if that packaging is at least 30 per cent recycled
• The weights of any exempted packaging and the reasons that packaging is exempt
• The weight of any plastic subsequently exported and so subject to tax relief.

These documents could include invoices, contracts, certificates of conformity, accreditations from external bodies and product specifications.

I’m an importer, where do I get this information from?

If you are importing plastic packaging, you will need to obtain this information from the manufacturer.

When and how do I register?

The online registration service will go live on 1 April 2022. If you have imported or manufactured more than 10 tonnes of plastics in the previous 12 months, you will then have 30 days to register.

You will also need to register if you believe you will exceed the 10-tonne threshold in the next 30 days.

What if I remove plastic packaging from my business?

If you can use alternative packaging materials in your business, you will be able to de-register if you fall below the 10-tonne threshold.

You will, however, need to continue to keep records of any plastic packaging you do use or manufacture.

How should I prepare for the introduction of the PPT?

We recommend the following steps:

• Assess your use of plastic packaging in your business and decide whether you are likely to exceed the 10-tonne threshold, including obtaining any information you need from external suppliers
• Assess whether you are likely to need to pay any PPT
• Ensure processes are in place to account for and record your use of plastic packaging