Plastic Packaging Tax – What You Need To Know

By Diane Harvey | December 9, 2021 | Accounting , Business Software , Manufacturing , Signum Solutions

Plastic packaging tax (PPT) is an environmental strategy created to increase demand for recycled plastic in order to divert it away from landfill or incineration. The government expects this will stimulate increased levels of recycling of plastic waste and foster the growth of the UK recycling industry.

What is Plastic Packaging Tax (PPT)?

A tax on plastic packaging will be introduced in the United Kingdom (“UK”) with effect from 1 April 2022. Put simply, this is a tax on any material that is designed to hold or carry another item and is made of plastic and/or has a ‘significant portion’ of plastic. The aim of this tax is to incentivise the use of recycled material in the production of plastic packaging.

The implications of this tax will be felt across many businesses in any sectors that use plastic packaging. Particularly relevant for the food and drink industry, the new “Plastic Packaging Tax”, known as PPT, will mean that manufacturers and importers of plastic packaging will have to pay a minimum rate of tax based on the volume of plastic packaging they put onto the UK market.

Who is liable to pay PPT?

The UK is one of the largest exporters of plastic packaging in the world. There are currently over 5,000 businesses involved in the manufacture or importation of plastic packaging in the UK. Businesses that produce or import more than 10 tonnes of plastic packaging per annum will be liable to register for the PPT scheme.

Any business that manufactures or imports plastic packaging in the UK will need to register for a PPT account. There will also be a credit system where companies can apply for credits on exported packaging including on packaged goods.

It is expected that the PPT will affect companies in the following sectors, amongst others;

Packaging Manufacturing

Consumer Goods

Food & Beverage

Cosmetics

Pharmaceutical

Chemical

What products will be affected by PPT?

 Plastic tax will be charged on plastic packaging that has less than 30% recycled content. The tax will be extended to imported products like drinks in plastic bottles. Products that include the heaviest component (plastic) will be considered plastic packaging and thus subject to the tax.

Certain exemptions apply. For example, PPT will not be charged on medicines with a license for human consumption, or packaging used to secure the safe transit of goods in international trades. This means that PPT will not apply to packaging used solely within trade or transits.

Exported goods will also be exempt provided that are exported within a 12-month timescale.

How much is Plastic Packaging Tax?

PPT will be set at a rate of £200 per metric tonne of plastic packaging (that contains less than 30% of recycled plastic).

HMRC registration

Registering with HM Revenue & Customs will ensure that any plastic packaging users are compliant with the new tax.

Manufacturers and importers of plastic packaging in the UK must be registered with HMRC unless they produce/import less than 10 tonnes in any 12-month period.

Please note that this is for information only. If you have any queries about PPT and its effect on your business or contracts, please contact your tax advisor or HMRC directly.

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