Update November 2021
In October 2021 HMRC issued further guidance about this proposed tax. Primary law has now been enacted and secondary law is expected in the near future. While it is possible that there may be changes or delays to the scope of the tax, for now, the target implementation date of 1 April 2022 remains.
A helpful change for some organisation is that the requirement to include a statement with your invoice that the tax has been paid will be delayed.
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.
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:
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.
There are four exemptions from the tax, regardless of how much recycled plastic they contain:
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.
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.
Further VAT changes on the horizon for online retailers
Brexit: VAT and Customs - Where is my import VAT?