Plastic Packaging Tax

Molly Colbert

March 9, 2022

From 1st April 2022, a new plastic packaging tax (PPT) will be introduced. The aim of the tax is to incentivise the use of recycled material in the production of plastic packaging.

The primary legislation (set in the Finance Bill 2021) provides that the tax will apply at £200/tonne on plastic packaging which has less than 30% of recycled plastic manufactured or imported into the UK (including packaging on goods which are imported).

The design of the legislation will provide a financial incentive for business to use more recycled plastic. The government are hoping this will lead to a higher demand for recycled waste, and thus divert plastic from landfills and incineration.  

A charge of PPT will happen when a chargeable plastic component is produced in the UK by a person acting during a business or where it is imported into the UK on behalf of such a person. The tax only applies to ’finished’ products.

What is a packaging component?

A ‘packaging component’ is a product that is designed to be suitable for use, it can be alone or in combination with other products, in the containment, protection, handling, delivery or presentation of goods at any stage in the supply chain of the goods, from the producer of the goods to the consumer or user. This is a broad definition which will contain many items which would not ordinarily be considered as packaging, e.g., coat hangers. The definition also includes reusable / refillable items such as plastic crates and intermediate bulk containers (IBCs).

Who is affected?

The introduction off the tax will have effect on a range of businesses due to scope being so broad. Additionally, even if a business meets the 30% recycled plastic threshold and therefore don’t need to pay any tax, they will still be required to register for PPT. Consequently, businesses need to be aware and start preparations to ensure compliance to the legislation well before it starts on April 1st, 2022.  

Majority of companies in the following sectors will be affected:

• Packaging Manufacturing

• Industrial Manufacturing

• Consumer Goods

• Online Retail

• Pharmaceutical

• Chemical

• Food and Drinks

• Cosmetics

• Oil

Are there exemptions?

There are four types of packaging components that are exempt from the tax, regardless of the quantity of recycled plastic they contain, they are as follows:

• Plastic packaging manufactured or imported for use in immediate packaging of a medical product

• Transport packaging used on imported goods

• Packaging used as aircraft, rail, and ship stores

• Components that are permanently

• designated or set aside for the use of other than a packaging use

How can business start preparing?

• Businesses should start completing assessments to discover the extent of their liability to PPT

• Review supply chains and consider where efficiencies could be achieved

• Decide who in the business will be responsible for PPT compliance

• Prepare staff with training and education on the legislation

Smart Supplier is a Product Information Management (PIM) system solution, which holds product specifications throughout its lifecycle. Smart Supplier includes packaging information in the product specifications and flags when the packaging has not met the 30% recycled plastic mark through KPIs.

This will ensure brand owners are held accountable and can show the areas for improvement. Having access to this information helps ignite business changes and avoids encountering having taxations. The software can help improve ESG scores and make accurate marketing claims.

For more information or to speak with our team, email info@ntassure.com or ring 01933 272089 📞

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References

https://www.pinsentmasons.com/out-law/guides/plastic-packaging-tax

https://www.legislation.gov.uk/uksi/2022/117/contents/made

https://www.pwc.co.uk/services/tax/insights/uk-plastic-packaging-tax-are-you-ready.html

https://www.rsmuk.com/blog/plastic-packaging-tax

https://www.veolia.co.uk/plastic-packaging-tax-hub

https://www.fdf.org.uk/globalassets/resources/public/general/ptf-060-21-a1.pdf