Plastic Packaging Tax Summary

ERP UK has produced this briefing for companies wanting to understand the new tax.

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Why is this important for your business?

  • Plastic Packaging Tax came into force in the UK on 1 April 2022
  • There are penalties for liable businesses who do not register
  • Costs for some businesses may be significant

What is the Plastic Packaging Tax?

A £200 per tonne tax on liable plastic packaging components – as of April 2022.

What is the aim of the Plastic Packaging Tax?

To increase the use of recycled material in the production of plastic packaging. The tax will encourage businesses to work with suppliers of products whose packaging includes recycled material. Demand for recycled material is expected to increase the collection and recycling of waste plastic – reducing the amount which is landfilled or incinerated.

Overview

Scope

The tax will apply to:

  • Plastic packaging components manufactured in the UK
  • Plastic packaging imported into the UK
  • Substantial modification to a piece of plastic packaging that was already manufactured or imported

Definition

  1. The definition of plastic packaging under PPT results in a scope wider than that of the current Packaging Waste Regulations
  2. Plastic includes bioplastics, including biodegradable, compostable, and oxo-degradable plastics

*The following exemptions and exclusions are a minefield of complexity. We recommend you read and understand the full details.

There are 3 categories of products that will not be subject to the tax:

  1. Products made of plastic where the primary function is storage, not packaging
  2. Products where plastic packaging is an integral part of the goods
  3. Products that are primarily designed to be re-used for the presentation of goods to a consumer or user and have been permanently set aside for this purpose, before or as soon as they have been manufactured or imported

There are 4 exemptions that remove specific forms of plastic packaging from the scope of the tax:

REMINDER: The following exclusions are a minefield of complexity. We recommend you read and understand the full details

  1. Packing used for the immediate packaging of licensed human medicine (must be MHRA regulated).
  2. Transport packaging used to import multiple goods safely into the UK (often referred to as tertiary packaging under the Packaging Waste regulations). HMRC has determined that reusable plastic crates fall within the definition of transport packaging and are therefore exempt from Plastic Packaging Tax (PPT) when imported filled with goods into the UK.
  3. Packaging used for stores on international aircraft, ship, and rail journeys.
  4. Components that are permanently designated or set aside for use other than a packaging use.

As this is a new tax guidance, the decisions on scope remain in development.

*Myth-busting:

Recyclability of packaging is NOT the same as recycled content. Regardless of whether you recycle packaging, or if your packaging can be recycled, unless it has recycled content of 30% or more, all liable packaging will be subject to the tax.

Registration

Registration is required within 30 days of meeting/exceeding or expecting to meet/exceed the 10-tonne threshold.

Businesses wishing to register should go here

Legislation

The legislation has provisions to allow HMRC to pursue tax that is not paid.  Businesses further down the supply chain become jointly and severally liable for the tax.

Exports

  • Where plastic packaging is intended for export, payment of the tax can be deferred for up to 12 months
  • Only if certain requirements are met and if the packaging is exported within that 12-month period the liability for that tax is cancelled
  • However, if the direct export condition is not met, the tax on the packaging becomes due from that date it was not met

Tax payment

  • Plastic Packaging Tax will be due on all in-scope plastic packaging that is not exempt from the tax
  • Quarterly tax reporting and immediate payments will be required

What are the risks of non-compliance?

Like VAT, Plastic Packaging Tax is regulated by Her Majesty’s Revenue and Customs (HMRC). Significant financial penalties will be imposed on companies for deliberate or unintentional non-compliance and/or providing inaccurate information.

What to do next

A non-exhaustive list of things to check and action to prepare your business:

  • Consider whether you need external support
  • Whether your business activities are covered by the Plastic Packaging Tax
  • Where your business activities sit in the supply chain (others may pass Plastic Packaging Tax on to you – please refer to your incoterms)
  • Whether your plastic packaging is within the scope of the Plastic Packaging Tax
  • What records and level of detail do you have:
    – Do you have the weight of plastic packaging down to a component level for what you manufacture, import, or substantially modify?
    – What recycled content % do those plastic packaging components have?
  • Estimate cost liability
  • Alert your finance team for budget and changes to invoices (they will need to show Plastic Packaging Tax paid)
  • Plan your data gathering and record-keeping for tax declarations

How can ERP help your business?

ERP’s Data Services team will:

  • Use existing datasets to complete HMRC declarations
  • Work with you to enhance or improve your datasets
  • Contact suppliers on your behalf
  • Gather the required information quickly and efficiently
  • Identify: in scope, out of scope, and exempt packaging
  • Identify: what packaging has a recycled content of 30% or greater
  • Confirm if you are under, meet or exceed the 10-tonne tax threshold
  • Determine your Plastic Packaging Tax liability
  • Provide a bespoke report to accurately complete HMRC tax declarations
  • Upon request of HMRC, produce supporting evidence for all exemptions and recycled content declarations
  • Identify suppliers which contribute the most to your liabilities for future targeted packaging improvements

If you have any questions or would like to find out more, please contact us:

Plastic Packaging Tax Enquiry Form

To find out how our data services can support your business with Plastic Packaging Tax, please complete our enquiry form.

Plastic Packaging Tax Enquiry Form

Further information

UK Government webpages cover the Plastic Packaging Tax in simple and straightforward detail:

Related legislation changes

Downloadable Plastic Packaging Tax Fact Sheet PDF document

Plastic Packaging Tax Fact Sheet

Disclaimer

PLEASE NOTE: The information provided here is based on draft legislation and guidance. While the information provided is believed to be correct at the time of issue, neither ERP UK nor its advisors accept liability in any circumstances for its accuracy, adequacy, or completeness, nor will any express or implied warranty be given.

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For all enquiries

Telephone: +44 (0)20 3142 6452
E-mail: uk@erp-recycling.org

ERP UK website

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