The plastic packaging tax is a new tax which is being introduced from 1 April 2022. The tax aims to provide a financial incentive to use recycled plastic in plastic packaging, which in turn will boost recycling and divert plastic away from landfill.

You may have to pay the tax if you manufacture or import plastic packaging that does not contain at least 30% recycled plastic by weight. However, the tax will not apply to businesses that manufacture or import less than 10 tonnes of plastic packaging a year.

HMRC have published guidance for businesses that may fall within the scope of the tax to help them prepare for its introduction.

Scope of the tax

The plastic packaging tax applies to finished plastic packaging components that are manufactured or imported into the UK which contains less than 30% recycled plastic by weight. If you import goods in plastic packaging, for example, drink in plastic bottles, you may have to pay the tax. However, the tax only applies to the weight of the plastic packaging, not to the goods that it contains.

Exemptions

Certain types of plastic packaging are exempt from the tax, irrespective of the amount of recycled plastic packaging that they contain. The exemptions apply to:

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

Goods for export

Liability for the tax can be deferred for up to 12 months if you import plastic packaging for export. The liability for the tax is cancelled if the packaging is exported within 12 months of importation.

Tax credit

A tax credit will be available if packaging within the scope of the tax is converted into other packaging. This is to prevent a double liability on the same packaging.

Amount of the tax

The tax will be payable at a rate of £200 per tonne of plastic packaging which does not contain at least 30% recycled plastic.

Registering for the tax

Manufacturers and importers of plastic packaging will need to register for the tax. You will need to register if:

  • at any time after 1 April 2022, you expect to manufacture or import at least 10 tonnes of plastic packaging in the following 30 days. Where this the case, you have 30 days in which to register; or
  • the business has manufactured or imported at least 10 tonnes of plastic packaging in a 12-month period ending on the last day of a calendar month. You are liable for the tax from the first day of the next month, and must register by the first day of the following month.

In each case, only plastic packaging manufactured or imported on or after 1 April 2022 is taken into account.

It is important to note that when working out whether you need to register, the weight of all plastic packaging that you manufacture or import is taken into account, not just that containing less than 30% recycled plastic.

Records

If you manufacture or import plastic packaging, you will need to keep records, even if you manufacture or import less than 10 tonnes annually as you will need to demonstrate to HMRC that you do not need to register for the tax. You will need to keep records of the weight of plastic packaging manufactured or imported, how much (by weight) is recycled plastic, and the amount by weight covered by an exemption.

HMRC have said that reduced record-keeping requirements will apply to businesses that manufacture or import less than 10 tonnes of plastic packaging each year, details of which are to be published in due course.

Get in touch

Talk to us if you manufacture or import plastic packaging to find out how the new tax will affect your business.