Plastic Packaging Tax in force in April

The new Plastics Packaging Tax will come into force from 1 April 2022.

The key facts of this tax are:

• the aim is to incentivise the use of recycled material in the production of plastic packaging;
• it will apply to plastic packaging manufactured in or imported into the UK containing less than 30% recycled content;
• the rate of tax will be charged at £200/tonne;
• it does not apply to businesses if they manufacture or import less than 10 tonnes of plastic packaging in a 12 month period.

Packaging subject to 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 into the UK, it is the person on whose behalf the packaging or component is imported who pays.

It only applies to "finished" products, mainly made of plastic, where the plastic content of the packaging contains less than 30% recycled material.

A "packaging component" is a product that is designed to be suitable for use, whether alone or in combination with other products, in the containment, protection, handling, delivery or presentation of goods at any stage in the supply chain, from the producer to the consumer or user.

This is a definition much wider in scope than that of the current Packaging Waste Regulations, which covers reusable and refillable items such as plastic crates and intermediate bulk containers (IBCs).

Products not included

There are some categories of products which will not be subject to the tax, such as those:

• designed to be suitable to contain goods at the time of sale to the consumer or user;
• designed where the packaging is an integral part of the goods and are necessary to enable the goods to be used by the consumer or user;
• which 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.

Exemptions

There are also several exemptions that are out of scope of the tax:

• 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.

Where plastic packaging is intended for export, payment of the tax can be deferred for up to 12 months as long as certain requirements are met.

Reporting and registration

Businesses will need to register from 1 April 2022 with HMRC if:

• there are 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.

If a business no longer meets the conditions for registration, they will be able to cancel their registration.

Secondary liability and due diligence

Although it is the importer or manufacturer of packaging components that is mainly liable for the Plastic Packaging Tax, others in the supply chain can also be liable if they knew that the tax should have been paid but wasn't.

The provisions apply not just to those involved in the production or importation of the packaging components but also those involved in transporting or storing products and operators of online marketplace or fulfilment businesses. This means that any related businesses need to carry out due diligence checks to establish the integrity of their suppliers.

Checklist of things to do

Below is a list of things you might need to do:

• look into whether your activities are covered by the Plastic Packaging Tax;
• see where your activities sit in the supply chain;
• determine if your plastic packaging is within the scope of tax;
• identify what records you have of the:
  • weight of plastic packaging you import (including around products) and the plastic packaging you manufacture,
  • recycled content of this plastic packaging;
• estimate cost liability;
• prepare for possible changes to invoices which may need to show whether the tax is paid;
• plan your data gathering and record keeping to support Plastic Packaging Tax submissions
• if you're in scope on 1 April 2022, put 1 May 2022 in your diaries as this is when you will need to register with HRMC.

Related legislation

For more information on the Plastic Packaging Tax, see the:

• Finance Act 2021;
• Plastic Packaging Tax (Descriptions of Products) Regulations SI 2021/1417;
• Plastic Packaging Tax (General) Regulations SI 2022/117.