Plastic is an extremely popular material used within the packaging industry, in fact, 36% of all plastic produced each year goes towards manufacturing packaging. But unfortunately, whilst the popular synthetic material has many uses, it comes with quite an array of environmental issues – that’s where the Plastic Packaging Tax comes into play.
What is the Plastic Packaging Tax?
The plastic packaging tax is an environmental tax designed to encourage the use of recycled plastic rather than new plastic. Proposed in 2017, the plastic packaging tax was passed in July last year. Coming into force 1st April 2022, this financial incentive for businesses to combat the use of single-use plastics and reduce waste should play a significant part in creating a greater demand for recycling and diverting waste away from landfill. According to the Waste and Resources Action Programme, packaging accounts for nearly 70% of plastic waste in the UK.
Eligibility and Liability
You must register from 1st April 2022 if you have manufactured or imported 10 or more tonnes of plastic packaging within the last 12 months, or if you plan to do so in the next 30 days. Registration is required whether the packaging is liable to the tax or not i.e, whether the packaging components contain less than 30% recycled plastic or more than 30% recycled plastic.
There are two instances in which liability arises:
- When a chargeable plastic packaging component is produced in the UK by a person acting in the course of a business – the person who produces the component is liable to pay for the amount charged.
- Plastic packaging that is imported into the UK on behalf of such a person – the person on whose behalf the component is imported is liable to pay for the amount charged.
What does the Plastic Packaging Tax apply to?
Plastic means a polymer material to which additives or substances may have been added, including polymers which are biodegradable, compostable, oxo-degradable. If a plastic packaging component is made from multiple materials but contains more plastic by weight than any other substance, it will be classed as a plastic packaging component. ‘Components’ are products designed to be suitable for use, either alone or in combination with other products, in the protection, containment, handling, and delivery of goods at any stage in the supply chain. Each plastic packaging component needs to be considered separately. For example, a plastic drinks bottle you would need to consider the bottle, the lid, and any plastic label separately.
The tax will apply to any finished plastic packaging designed to be suitable for use in the supply chain, single use by the customer, and any finished plastic packaging manufactured in, or imported into the UK where the plastic used in it’s manufacture is made from less than 30% recycled plastic.
If the plastic packaging consists of less than 30% recycled plastic, then a tax rate of £200 per tonne will be charged. Businesses are exempt from paying tax if they manufacture or import less than 10 tonnes of plastic packaging within a 12 month period.
Your plastic packaging tax can be deferred providing you have evidence that you intend to export the packaging from the UK within 12 months.
There are some exclusions that apply to certain packaging components, these include:
- Long term storage of goods (E.g. DVD cases)
- Integral part of the goods (E.g lipstick container but not lid, printer cartridges)
- Reused for presentation of goods (Point of sale)
Packaging exempt from from tax
Packaging should only contain recycled plastic where it is permitted under other regulations and food and safety standards. This includes plastic packaging:
- Permanently recorded as set aside for non-packaging use;
- Where used in aircraft, ship and rail goods stores;
- Manufactured or imported for use in immediate packaging of a medicinal product;
- Used in transport on imported goods.
What Do You Need To Do?
The plastic packaging tax will create the need for various systems and processes throughout supply chains of thousands of businesses. So, to be as prepared as possible for when the tax comes into force, we advise you to take some preliminary steps.
- Make sure you are well informed and assess the impact that the tax will have on your business. If your team is up to speed on the process involved, it allows your business to be proactive rather than reactive.
- Review your current data and ensure all relevant details are accounted for. This will help with reporting down the line, make sure the information you provide is accurate, and allow you assess any gaps that need closing to comply with the new legislation.
- Review your supply chain; from manufacturer to consumer, it’s important that all parties involved are aware of their responsibilities.
For more information on the Plastic Packaging Tax beginning next month and the steps to take to decide whether you need to pay tax, head over to gov.uk website.
As a packaging supplier to thousands of businesses and over 20 years of experience in the industry, we want to make sure our customers are up to scratch on the new plastic packaging tax taking that will be enforced next month. So for any questions you may have, comment below or drop us an email – we’re here to help.
