Are you ready for the plastic packaging tax?

In our latest blog, our senior tax manager John Carter looks at what businesses need to know about the impending plastic packaging tax and how they can prepare for it in advance.

What do businesses need to know about plastic packaging tax? Do businesses need to be aware of it even if they aren't directly involved in manufacturing or importing it? 

The proposed plastic packaging tax (PPT) is coming into force on 1 April 2022.  Specifically, PPT only applies to manufacturers and importers of plastic components which contain less than 30% recycled plastic.  

Businesses that are involved in the manufacture or importing 10 or more tonnes of finished plastic packaging components either within the last 12 months or during the next 30 days will be required to register for the tax.  This will affect most companies in sectors such as consumer goods, online retail, pharmaceutical and cosmetics to name just a few.

There are exemptions from the tax, however, which include plastic packaging manufactured for use in the immediate packaging of a medical product, transport packaging used on imported goods, packaging used in aircraft, ship and rail stores and components that are designed or set aside for use other than a packaging use.

How can businesses prepare for the new tax? Any specific advice for businesses who may be affected by the tax?

Clients need to be aware of the new guidelines that commence 1 April and start to prepare to meet their compliance obligations.

Businesses need to assess the impact of PPT on their business by assessing supply chains to determine which are affected.  They also need to implement systems and assign roles and responsibilities, at the same time introduce the required changes to systems to enable the necessary data collection and reporting requirements to be met.

How effective is it likely to be in encouraging businesses to switch to greener, recyclable materials?

A lot of firms are keen to improve their carbon footprint and switch to more environmentally friendly materials.  PPT is an environmental tax designed to provide a financial incentive for businesses to use recycled plastic in the manufacture of plastic packaging.  The financial implications should also act to incentivise clients, with the tax applicable at a rate of £200 per metric tonne on plastic packaging with less than 30% recycled plastic manufactured or imported into the UK. 

More information on the  plastic packaging tax is available on the GOV.UK website