UK: Plastic Packaging Tax

Objective 

The tax will provide an incentive for businesses to use recycled materials in the production of plastic packaging. This will increase levels of recycling and the collection of plastic and diverting it away from landfill or being incinerated. 

Plastic Packaging tax 

Plastic packaging is packaging that is predominantly plastic by weight. This tax applies to plastic packaging produced in or imported into the UK that contains less than 30% recycled plastic. 

It is estimated to impact 20,000 producers and importers of plastic packaging. There will be one-off costs to these businesses which include familiarising the new rule for staff training, registration with HMRC and developing the required reporting framework to complete the tax returns. 

This will mean that any plastic packaging on products with less than 30% recycled plastic will incur a tax charge. This tax will come into effect from April 2022. 

• Tax will be charged at £200 per metric tonne. Imported plastic packaging will be liable to the tax, whether the packaging is unfilled or filled (i.e. with or without product in it). 

• There will be an exemption for business who manufacture or import less than 10 tonnes of plastic packaging in a 12-month period. 

Tax will not be chargeable on plastic packaging which: 

• Has 30% or more recycled plastic 

• Is made of multiple materials of which plastic is not proportionately the heaviest when measured by weight

• Is manufactured or imported for use as immediate packaging of licenced human medicines 

• Is in the transport packaging to import products into the UK Taxable businesses will need to keep and supply evidence which will include: 

• The total weight of all plastic imported and manufactured in the UK. 

• The proportion of recycled plastic as a percentage of total plastic weight. 

• Whether the package is predominantly plastic by weight. 

• The date the packaging was manufactured, imported for use in the UK. 

• Due diligence will need to be carried out on supply chains and processes which form the basis of the calculation of the Plastic packaging tax returns. 

Summary 

The tax seems likely to have a very positive impact on the environment in a similar manner to the five pence charge on single-use carrier bags introduced in 2015, which has resulted in a reduction of plastic bag sales in major supermarkets. 

The tax is also likely to be popular with the public as it is a step in the right direction to control the current environmental issues.