The Plastic Packaging Tax Part 1 – What You Need To Know

Key Facts:

  • The tax will came into effect on 1st April 2022
  • The tax will be charged at £200 per metric tonne
  • It applies to importers or manufacturers of more than 10 tonnes of plastic packaging
  • Bio-based, biodegradable, compostable and oxo-degradable plastics are all in scope of the tax.

What is the Plastic Packaging Tax?
The Plastic Packaging Tax is a tax on the plastic packaging manufactured in, or imported into the UK, where the plastic used in its manufacture contains less than 30% recycled plastic. Where 30% or more recycled plastic is used, no tax will be due, but the plastic packaging will still need to be accounted for.

Who pays?
The tax applies to importers or manufacturers of more than 10 tonnes of plastic packaging.

What plastic is liable for the tax?
The tax is due on finished packaging components that are manufactured in or imported into the UK, where 30% or less recycled plastic is used. Where plastic packaging components are imported, this includes products that are both empty or pre-filled.

The tax applies to pallet wrap, as much as it does to PET bottles.

What type of plastic is covered?
The legislation defines what is and isn’t covered by the tax.

Key definitions:

“Plastic means a polymer material which additives or substances may have been added. This does not include cellulose-based polymers which have not been chemically modified.”

Plastic packaging component
“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 of the foods, from the producer of the goods to the consumer or user.”

Recycled plastic
“Recycled plastic is plastic that has been reprocessed from recovered material, by using a chemical or manufacturing process, so that it can be used with for its original purpose or for other purposes. This does not include organic recycling.”

There are three types within this scope:

1. Recovered material
2. Pre-consumer material
3. Post-consumer material.

There are three categories of product as set out by HMRC that are exempt from the tax. These are where the:

1. Packaging function is secondary to the storage function
2. Packaging is an integral part of the goods
3. Packaging is designated primarily to be reused for the presentation of goods.

In addition these three categories of product that are exempt, there are also four types of products that are exempt, despite fitting the definition of what plastic packaging is. These are plastic packaging components that are:

1. Used in the transit packaging on imported goods
2. Used in aircraft, ship and rail goods stores
3. Used in the immediate packaging of a medicinal product
4.Permanently designated or set aside for use other than for a packaging use.

More details surrounding these exemptions are here.

Record keeping:
As set out in the guidance, any business that manufactures or imports plastic packaging, needs to keep a record of what they are making or importing.

It is also set out in the guidance that record keeping should occur even when the plastic packaging you manufacture/import is not liable.

HMRC states the records you keep should show the:

  1. The total amount in weight and a breakdown by weight of the materials used to manufacture plastic packaging, excluding packaging which is used to transport imported goods
  2. The data and calculations used to determine if a packaging component is, for the most part plastic, and how much recycled plastic it contains
  3. The weight of exempted plastic packaging and the reason for the exemption
  4. The amount in weight of plastic packaging exported, and therefore the allowed relief from the tax.

The guidance provides examples of documents that you could use to show the required details – but does not say exactly what documents you should keep. There is a table provided in the guidance which sets out some examples of documents you can use for record keeping. The table can be found here.

If you export plastic packaging, then there are options for deferring payment and also – if exporting within the 12-month period – cancelling the tax you owe. More details on exporting can be found here.

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