On 1 April 2022, the UK Government introduced the Plastic Packaging Tax (PPT). As the name suggests, PPT is a new tax on plastic packaging. More specifically though, it's a tax on plastic packaging manufactured in or imported into the UK that contains less than 30% recycled plastic. That's the main statement from the UK Government, but here's a more complete overview of the tax:
UK Plastic Tax
PPT aims to drive more demand for more sustainable materials. Since April 1, there's been a new financial incentive for businesses to use more recycled plastic. In turn, the government estimates that demand for recycled plastic will increase by up to 40%. This could save 200,000 tonnes of carbon dioxide being released between 2022 and 2023. The Plastic Packaging Tax will also lead to more packaging being recycled and less going to landfill. And it may help drive recycling innovation in the UK.
There are three main groups of businesses that are affected:
1. Businesses that manufacture or import 10 tonnes or more of plastic packaging per year. If this is your business, you will have to register for the tax.
This doesn't mean for certain you'll have to pay, but any business that falls into this category has to register. If your packaging then contains less than 30% recycled content and doesn't meet any of the exemptions below, you will have to pay PPT. It's these businesses that are the most affected by the Plastic Packaging Tax.
Packaging exempt from the Plastic Packaging Tax:
Next step: register for the Plastic Packaging Tax
2. Businesses that import or manufacture less than 10 tonnes of plastic packaging. If you do, you may be exempt from the tax itself but you do need to keep records of your packaging. This includes records to show:
If this seems like a lot, it is, but these records ensure businesses comply with the new tax. As the Government says, “plastic packaging is assumed to not meet the recycled content test unless it can be shown it does".
Next step: start to keep the right records.
3. Customers of those importers and manufacturers affected. As costs increase for these businesses because of the Plastic Packaging Tax, they will likely pass on some or all of that cost to customers. This means PPT can affect businesses in any industry, including food and beverage, fashion and electronics. If you buy plastic packaging, this is the key takeaway: you're likely to see an increase in prices.
At the same time, this makes PPT a good opportunity to consider alternative packaging. Paper-based solutions such as mailer boxes, for example, won't be affected by the tax. These more sustainable types of packaging offer a way to avoid the knock-on costs of PPT.
Next Step: consider alternative packaging if possible.
As an importer of packaging made from recycled plastics, bioplastics and some virgin plastics, we've registered for the Plastic Packaging Tax. We're also keeping track of any changes to the tax which we'll update this article with periodically. Whilst PPT is affecting businesses throughout the supply chain, laws that encourage more sustainable materials are a positive step.
If you're still unsure whether you need to register for the Plastic Packaging Tax, HMRC has published a helpful guide here.
Have more questions about the Plastic Packaging Tax? Contact us