How the Plastics Packaging Tax is increasing costs

How the Plastics Packaging Tax is increasing costs

Six out of 10 companies that use plastic packaging have seen their packaging costs increase since the introduction of the Plastics Packaging Tax on 1 April 2022, according to new research we have undertaken.

Our study reveals that of those companies which have experienced cost increases, 70% have seen cost increases of up to 24%, whilst two in 10 companies have seen their costs increase by more than 75%.

As the UK’s leading expert on pallet wrapping and stability, we undertook the research to understand the impact of the new tax, which applies to pallet wrap as much as PET bottles.

The Plastics Packaging Tax came into force at the start of April and applies to plastic packaging with less than 30% recycled content. Companies have to pay £200 for every tonne of plastic packaging they use that does not contain the minimum recycled material. It’s estimated the measure now affects around 20,000 producers and importers of plastic packaging.

Whilst 90% of the businesses surveyed were aware of the tax only one in 10 say they fully understand the implications of the tax on their business. To cope with the increases in price most businesses have taken steps to reduce the level of plastic packaging they use, switched away from plastic or swapped to recycled content material. With several companies adopting all three measures.

The research shows the increase in costs is likely to feed down the supply chain, with half the businesses confirming they plan to pass the increase onto their customers.

Our survey confirms that the short-term effects of the tax have had a serious effect on supply chain costs. Understandably there’s been a rush to source recycled plastic packaging products, but stocks are limited and high demand is driving prices up and up. This has been accentuated by the global demand for oil.

It’s encouraging to see so many companies surveyed taking steps to reduce the amount of packaging they use. Forward thinking businesses will continue to strive make further reductions which makes good environmental and business sense.

One area that is often overlooked when it comes to packaging is pallet wrap. This essential product to the supply chain can provide significant savings and performance improvements to packaging operations. Read our tips for reducing costs and optimising your pallets here.

Our experts estimate UK businesses use 150,000 tonnes of stretch wrap a year and that through their expertise in optimisation this could be reduced by 45,000 tonnes per year, reducing Plastics Packaging Tax liability by almost a third.

We have also launched a range of sustainable pallet wrap products made with 30% recycled content ahead of the introduction of the Plastics Packaging Tax. The range incorporates films with nano technology which has higher stretch properties and provides a more environmentally friendly option, as much less is required to wrap a pallet leading to reduced plastic use. The range also includes a stretch film option for pallet wrapping by hand, as well as packaging tape for machine and manual carton sealing, plus pallet hood covers and heat shrink film.

So, if you’ve not thought about it yet, now is the time to get to grips with your pallet wrap and stretch film usage and start looking at your options now that the Plastic Packaging Tax has been introduced. Our team are here to help and are happy to talk through your current products and what your best options are moving forward – whether that’s with a recycled content option or optimisation.

If you’d like to know more about how the experts at Lindum Packaging can help, drop us an email or even better give us a call. We’ll be delighted to answer your questions.