Plastic packaging tax – the lowdown

The UK is implementing a plastic packaging tax in 2022 for any plastic packaging having less than 30% recycled content. We spoke to Sarah Foster, Managing Director, at Comply Direct to get the lowdown on everything you need to know about this new incoming tax.

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. On 17 August 2021, 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, we have been raising awareness amongst business leaders likely to be impacted so they can be prepared for the potential impacts.

According to recent media reports it is estimated that circa 80% 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 going to be affected by the tax?

If you manufacture or import plastic packaging material destined for the UK market, then it’s worth checking whether you will be liable. Such businesses will need to evidence that the plastic packaging they have manufactured and/or imported contains a minimum of 30% recycled content to avoid the tax.

If some, or all, of the packaging you manufacture or import doesn’t meet the 30% threshold by weight, then a £200 per tonne levy will apply to that which doesn’t. You will need to think about the systems you have in place to capture and verify your 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 resources 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 the government and perhaps even overdue by some. We must remember that 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 your plastic tax liability

Whilst on the face of it, the tax is fairly straightforward; either get at least 30% recycled content into your plastic packaging or pay the tax on it when you manufacture or import it, there are a couple of exemptions and a de-minimis to navigate.

You will need to carefully consider your reporting systems so that they are both efficiently recording data and 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 you keep your plastic tax bill commensurate to the plastic you manufacture and/or import and the recycled content within it.

Comply Direct has several resources for businesses that manufacture and/or import plastic packaging including a free to use plastic tax calculator which can be found here and provides you with a quick indication of your potential plastic tax liability. In addition, you can keep an eye on their latest news page here for all of the most recent updates, as well as keep up to date with our plastic packaging tax policy calendar here.

Get in touch

If you would like to discuss the plastic packaging tax in more detail, please get in touch with Sarah Foster at Comply Direct by emailing sarah@complydirect.com or calling 01756 794951

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