Plastic Tax: United Kingdom

published on 14 October 2022

1. Introduction of plastic/environmental tax

Local status of the introduction of plastic tax

The tax was introduced on 1 April 2022 and applies to qualifying businesses.

The purpose of the new tax policy is to encourage businesses to use recycled material in the production of plastic packaging. It is speculated that this will create a greater demand for this material and in turn stimulate increased levels of recycling and collection of plastic waste.

A PPT registration will be required by qualifying businesses. 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 tons 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 tons 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 tons 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.

2. Plastic/Environmental Tax scope and rates

Person liable to pay the tax

Manufactures of plastic packaging (in the UK) and importers of goods which contain plastic packaging, or importers of plastic packaging will be liable to Plastic Packaging Tax (PPT). However 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.

Tax base

The tax will be charged with GBP 200 per ton for packaging which contains less than 30 percent recycled plastics.
Qualifying businesses will need to monitor their tonnage on a rolling 12-month basis to establish whether the 10 tons threshold has been breached.

Product scope

New plastic materials which is used for packaging. There are two 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

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

Exemption/exclusion from taxation

No PPT will be payable where packaging contains more than 30 Percent recycled plastic.

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

There are exemptions available for waste material.

Deadlines

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.