Plastic bottle recycle

New Plastic Packaging Tax from April 2022

Ajay Raval, Manager, VAT
19/08/2021
Plastic bottle recycle

A new UK tax on plastic packaging materials is due to come into effect from 1 April 2022. The Plastic Packaging Tax (PPT) is likely to affect a number of businesses involved in the manufacture or importation of plastic packaging materials. The intention with the tax is to encourage the use of recycled plastic packaging materials.

Key points

  • The Plastic Packaging Tax is due to take effect from 1 April 2022 and applies to plastic packaging manufactured in or imported into the UK containing less than 30% recycled plastic when measured by weight.
  • PPT will not apply to plastic packaging that contains 30% or more recycled plastic, or any packaging which is not largely plastic by weight.
  • The tax will be charged at a rate of £200 per tonne. The £200 charge will be apportioned where the plastic packing is less than a tonne.
  • It will apply to businesses who manufacture or import plastic packaging components or import packaged goods into the UK.
  • Smaller businesses who manufacture or import less than 10 tonnes of plastic packaging in a 12-month period will be exempted from the charge.

Who is likely affected?

PPT will affect UK manufacturers of plastic packaging, importers of plastic packaging, business customers of manufacturers and importers of plastic packaging, and consumers who buy plastic packaging or goods in plastic packaging in the UK. There will be an exemption for manufacturers and importers of less than 10 tonnes of plastic packaging per year.

Businesses that manufacture or import 10 or more tonnes of plastic packaging over a 12-month period will need to register for the tax regardless of whether the business will have to pay any tax. This includes importers of packaging which already contains goods, such as plastic bottles filled with drinks.

Businesses that manufacture or import plastic packaging, even if it is less than 10 tonnes a year will need to keep records of the packaging that is manufactured or import. Per HMRC’s guidance, plastic packaging is assumed to not meet the recycled content test unless it can be shown that it does.

The online service to register and pay will be available on 1 April 2022 when the tax takes effect. HMRC will provide more information about how to do this later in the year.

What is defined as plastic packaging?

The government has issued draft statutory instruments that provides a description of products included in the new tax. Plastic includes bioplastics, including biodegradable, compostable and oxo-degradable plastics.

HMRC’s guidance lists products that are liable to the PPT and includes various types of plastic bags and disposable cups.

The guidance also lists plastic components which are not subject to PPT where they are either products designed to be suitable to contain goods at the time of sale to the consumer or products designed so that the packaging is an integral part of the goods and are necessary to enable the goods to be used by the consumer or user. These include:

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

HMRC defines recycled plastic as a plastic that has been reprocessed from recovered material, by using a chemical or manufacturing process, so that it can be used either for its original purpose or for other purposes but does not include organic recycling.

Exemptions

There are four exemptions from the tax, regardless of how much recycled plastic they contain:

  • plastic packaging manufactured or imported for use in the immediate packaging of a medicinal product
  • transport packaging used on imported goods
  • packaging used as aircraft, ship and rail stores
  • components that are permanently designated or set aside for use other than a packaging use.

Record Keeping

Businesses that manufacture or import plastic packaging will need to make sure that they have the information needed to establish how much tax is required to be paid, or to confirm that the business has nothing to pay. Businesses will also need to be aware of how much recycled plastic is in the packaging manufactured or imported.

Business that manufacture or import less than 10 tonnes of plastic packaging a year will still need to keep some records to demonstrate that they are below the threshold.

If a business is responsible for accounting for the tax as the manufacturer or importer of plastic packaging, any invoice issued to a business customer must include a statement that Plastic Packaging Tax has been paid on the packaging. This requirement may necessitate changes to the business’ invoicing systems.

Business located overseas

Businesses that are not resident in the UK and import more than 10 tonnes of plastic packaging in a year will need to register for PPT even if the plastic is made up of more than 30% recycled materials. Where overseas business import less than 10 tonnes of plastic packaging, they will still need to keep some records that evidences this.

If you would like to discuss this issue further, please get in touch with Rob Marchant or your usual Crowe contact.

Insights

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Considering the accuracy of Customs audits and when to contemplate challenging them.
Funding from a government SME Brexit Support Fund grant could be used for the support
If you have chosen to delay your Customs declarations for goods imported into the UK from the EU since 1 January 2021 the deadline is approaching.
From 1 July 2021, the EU will introduce new VAT rules for B2C supplies of goods including new obligations for Online Market Places (OMP)

Contact us

Robert Marchant
Robert Marchant
Partner, VAT and Customs Duty services
London