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United Kingdom: Are you ready for Plastic Packaging Tax? – To Be Introduced 1 April 2022

published on 29 March 2022 | reading time approx. 5 minutes

From 1 April 2022, manufacturers of plastic packaging (in the UK) and importers (hereafter “qualifying businesses”) of goods which contain plastic packaging, or importers of plastic packaging will be liable to Plastic Packaging Tax (hereafter “PPT”). The UK is adopting the tax on new plastic material which is used for packaging, as part of its campaign to reduce the amount of plastic waste. The tax will be charged at £200 per tonne for packaging which contain less than 30 percent recycled plastics.

Registration »
Applicability »
Packaging designed to be suitable to use in the supply chain »
Packaging designed to be single use consumer packaging »
Who must account for the tax? »
Declaration, payment and Record keeping »
Other information »

The UK tax authorities are encouraging businesses to use recycled plastic rather than new plastic material. A PPT registration will be required by qualifying businesses. No PPT will be payable where packaging contains more than 30 percent recycled plastic.

The PPT cost can be passed on down the supply chain. The UK tax authority are encouraging businesses to discuss the effects of PPT with suppliers and customers. Where businesses wish to pass on the cost of the PPT down the supply chain, they should include PPT in the net selling price before any applicable VAT.

Registration

Qualifying businesses will need to monitor their tonnage on a rolling 12-month basis to establish whether the 10 tonne threshold has been breached.

The threshold ‘count’ begins on 1 April 2022 and applies to qualifying businesses from this date onwards. The following tests can be applied to determine when you should register for PPT:

If the amount of plastic packaging in the next 30 days breaches the 10 tonnes threshold, then you must register within 30 days, and account for PPT from the date you identify you have breached the threshold; or
If the amount of plastic packaging in the last 12 months breaches 10 tonnes threshold, then you must register for PPT within 30 days, and account for PPT from the date you identify you have breached the threshold. (The 12 month rule only applies from 1 April 2022)

Plastic packaging which contains more than 30 percent recycled plastic still contributes to the 10 tonne threshold. PPT will not be payable although a declaration will still need to be submitted to the UK Tax Authorities. Records will need to be kept to demonstrate the annual tonnage.

There are 2 types of plastic packaging which must be excluded from the above tests:

Exemption 1 – Transport packaging when importing goods into the UK
Exemption 2 – Plastic packaging products used in aircraft, ship or railway stores for international journeys

The following 2 types of packaging must not be excluded from the test, although are exempt from PPT:

Exemption 3 – Plastic packaging for use in the immediate packaging of a human medicine product
Exemption 4 – Products that are permanently designed or set aside for non-packaging use

Applicability

There are 2 types of plastic packaging subject to the tax. These are packaging designed to be suitable for:

use in the supply chain
single use by the consumer

If your packaging is made up of several packaging components, you must account for PPT on each component.

Individual packaging components are generally manufactured separately before being assembled into a packaging unit. Examples include:

bottles, caps and labels are manufactured separately before being assembled to make packaging units for drinks and liquids
trays, boxes and plastic windows are manufactured separately before being assembled to make packaging units for certain foods, such as pies and cakes

Packaging designed to be suitable for use in the supply chain

You should check whether each plastic packaging component that you manufacture, or import is subject to PPT. A plastic packaging component is a product that’s designed to be suitable for use in the supply chain, from the manufacturer of the goods to the user or consumer. It can be used alone or in combination with other products. If the packaging component meets the definition, it does not matter if it is produced or imported for use in the supply chain of the goods, or by a consumer or user.

The packaging must do one or more of the following functions:

contain the goods
protect the goods
handle the goods
present the goods
deliver the goods

Examples of packaging components include plastic:

trays used to contain and protect food, such as a ready meal tray
film to protect goods, such as film around raw meat
pots designed to handle and deliver products, for example yoghurt pots,

Find more examples of packaging designed for use in the supply chain.

Packaging designed to be single use consumer packaging

For the purposes of PPT, single use consumer packaging is any single use product designed to be used by a consumer or domestic user in performing one or more of the following functions in respect of goods or waste:

containment
protection
handling
presentation
delivery

These products would be used by the consumer rather than in the supply chain. Examples of single use consumer packaging are:

plastic bags
disposable cups, plates and bowls
gift wrapping such as ribbon and sticky tape

Find more examples of packaging designed to be single use consumer packaging.

Who must account for the tax?

UK manufacturers who are responsible for finishing the plastic packaging component are responsible for the declaration and payment of PPT. In the case of UK manufactured packaging, it would be classed as finished, when the last substantial modification is made before packing or filling.

In the case of imported of goods, which contain plastic packaging the business responsible for importing is also responsible for the declaration and payment of PPT.

The seller is encouraged by HMRC to notify on the sales invoice that the price charged includes PPT.

Declaration, Payments and Record keeping

PPT declarations will be in line with standard calendar quarters, beginning 1 April 2022, and ending on the 30 June 2022. The return will be due to be submitted and paid by the end of the following calendar month.

It is recommended to keep accurate records about your plastic packaging, and where more than 30 percent of recycled plastic is used in packaging ensure you have the relevant specification information for the packaging. You should also ensure that all details concerning the weight are correctly recorded, you should discuss, where necessary with the suppliers and customers about the recycled plastic packaging that is in use and evidence that you require for your own records that the packaging is free from PPT.

If you do not registered for PPT, it is recommended that you continue to keep records, in case of review by UK Tax Authorities. This is especially important where the amount of plastic packaging is close to the threshold.

Other information

Group registrations are available, where each entity will have its own threshold, but only one person in the group is required to make a return submission/payment.
There are exemptions available for waste material
It is advised to review all contracts in place with customers to include PPT where necessary.
All records will become part of the 6 year statutory record keeping retention rule
If you are importing the goods, you should discuss and gain all specification information from your overseas supplier to enable you to decide how PPT should apply.