April 2022 will see the new Plastic Packaging Tax (PPT) come into effect, applying a cost of £200 per tonne to any chargeable plastic Packaging — a plastic packaging component of a single specification that cannot be demonstrated to contain at least 30% recycled material — ‘manufactured in, or imported into the UK’.
Limited exceptions include:
1. Immediate packaging for human medicines
2. Components used as transport or tertiary packaging for import into the UK
To provide a clear economic incentive for businesses to use recycled material in the manufacture of plastic packaging, which will create greater demand for this material. In turn this will stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.
Definition of Liable Plastic Packaging Component
Clause 7 of the bill defines a packaging component as:
· A component designed to be used on its own or with other products for the transportation of goods from a manufacturer to a user or consumer (B2B/B2C);
· A component (not included above) designed to be used by the user or consumer to transport, store or preserve goods;
· A tax liable packaging component is ‘Hand Separable’ and ‘Finished’ (i.e., bottle cap) and that by weight contains more plastic than any other substance in the component (i.e., a 100g plastic packaging component = 40g plastic, 30g fibre, 30g aluminium).
Liability for the tax
‘The first business to commercially exploit the liable packaging as a finished component in the UK’ will be liable under the PPT. This will include importers of filled or unfilled plastic packaging and converters of UK manufactured plastic packaging. There are 10 tonne de-minimis for manufacturers and importers of plastic packaging per year. However, those close to this limit must maintain adequate records.
Liability to register: Producers and Importers
Clause 14 of the PPT Bill, provides that Manufacturers and Importers of plastic Packaging must register for PPT if they meet either criterion:
1. Reasonable grounds to believe they will manufacture and/or import 10 tonnes of plastic packaging components within the next 30 days from any given day; or
2. As above in the last 12 months (Bill amended to cover from 1st April 2022 tax year)
Be Prepared: Impact on business
‘This measure is expected to impact on up to an estimated 20,000 producers and importers of plastic packaging’ and it will be ‘significant’. Be prepared for one-off costs such as staff training and familiarisation, and on-going costs such as data collection and tax returns. In line with other taxes, there will be civil and criminal penalties for failing to comply with the tax, including penalties for failure to register, failure to file returns and failure to pay the tax.
For businesses that import and/or manufacture Plastic Packaging, keep adequate records for tax and customer needs, such as type and quantity of plastics supplied. And make sure your data collection and retention systems are robust. Consider opportunities to increase the use of recycled plastic in your packaging. For B2B transactions the manufacturer or importer of plastic packaging must declare on all customer invoices that tax has been paid on the packaging concerned.
For further information you can contact our specialist advisor, Kelvin @ email@example.com