UK Plastic Packaging Tax – the lowdown

By Sarah Foster, managing director at Comply Direct

The UK Plastic Packaging Tax is a taxation policy introduced as part of the 2018 resource and waste strategy by the government. The aim of the tax is to encourage recycled content to be used in plastic packaging placed on the UK market.

Where we are now

We are now just a little over six-months away from the implementation of the UK plastic tax, a brand-new tax that it is estimated could impact 20,000 businesses.

In August a technical consultation on the tax closed, the purpose of which was to provide an opportunity for stakeholders to feedback specific technical issues generated by the draft regulations.

As we wait for the consultation outcomes and the release of the legislation in its final form, it is important that businesses likely to be impacted build knowledge on the current plastic tax stance, so they can be prepared for the potential effects.

According to recent media reports it is estimated that around 80 per cent of businesses are unaware of the tax, indicating that we could see a lack of preparedness in terms of both data recording, reporting requirements and budgeting, upon implementation of the tax from April 1, 2022.

Who is affected?

Businesses who manufacture or import plastic packaging material destined for the UK market are likely to be liable. Such businesses will need to evidence that the plastic packaging they have manufactured and/or imported contains a minimum of 30 per cent recycled content to avoid the tax.

If some or all the packaging manufactured or imported doesn’t meet the 30 per cent threshold by weight, then a £200 per tonne levy will apply to that which doesn’t.

Organisations will need to think about the systems they have in place to capture and verify data for submission to HMRC from next year. This is additional to factoring in the business cost of the tax passed on from those who have paid the tax earlier.

Why is this happening now?

This is a key question indeed, especially with many businesses still navigating the challenges brought about by the pandemic.

The Plastic Tax is a measure put in place by HMRC as part of the UK’s resource and waste strategy which was first tabled in 2018 – it is part of a much wider plan to reform packaging waste legislation to be fit for a circular economy.

The tax has been designed to drive behaviours that encourage the usage of recycled material in plastic packaging in the UK, which in turn should drive investment in high quality recycling technologies for the numerous and varied plastic types used in packaging.

With a growing movement to step-up the protection of our environment, such behaviour change is considered necessary by government and perhaps even overdue by some. Despite plastic waste being an issue if it isn’t disposed of correctly, there are strong arguments that, as a material, it is very useful in terms of providing containment and protection of goods.

Managing plastic tax liability

The tax seems to be fairly straightforward at surface level; either achieve at least 30 per cent recycled content within plastic packaging handled or pay the tax on it when it is manufactured or imported.

However, there are a couple of exemptions and a de-minimis to navigate. Liable businesses will need to carefully consider their reporting systems so that they are both efficiently recording data and ensuring that it is fit for purpose to meet the requirements of the tax, to capture tax details at a component level, for example.

Data accuracy will be key to ensure organisations keep their plastic tax bill commensurate to the plastic they manufacture and/or import and the recycled content within it.

Comply Direct is a government approved producer compliance scheme and environmental consultancy.

We have several resources for businesses that manufacture and/or import plastic packaging including a free to use plastic tax calculator which can be found at https://forms.complydirect.com/plastic-tax-calculator

For more details visit www.complydirect.com