Plastic packaging tax: government unveils next steps

techUK responded to a Treasury consultation on the design of its proposed new plastic packaging tax in August 2020

techUK responded to a Treasury consultation on the design of its proposed new plastic packaging tax in August 2020. The government has now published its response and you can find the Summary of Responses here. It has also published draft legislation - this includes the latest details on Government's plans which you can find here.

A consultation is now live until 7 January on the draft legislation and techUK will respond if member’s highlight issues. Following consultation on the primary legislation for the tax, the government will introduce this legislation in a future Finance Bill. The government will then publish secondary legislation and guidance giving more detail, to help businesses to prepare properly for the introduction of the tax and to meet the new requirements from April 2022.  

The key features of the tax will be:

  • £200 per tonne tax for packaging manufactured or imported with less than 30% recycled plastic  
  • Applies to both filled and unfilled packaging
  • Businesses manufacturing or importing less than 10 tonnes in a 12-month period are exempt but you will need to keep records if you are close to that threshold.
  • Reporting will be based on quarterly returns

Other respondents to the consultation agreed with most of the Government's proposals, so the key features will be taken forward as planned by the Treasury. You can find our response at the bottom of this page.

techUK’s recommendations in our response to the consultation and the Government response were:

  1. Exclude plastic packaging designed for the transport of imported goods (e.g. pallets and shrink-wrap) - Government agreed, however it clarified that individual product packaging however will be in scope.
  2. Manufacturers will find it difficult cases to obtain evidence on the use of recycled content in international supply chains- Government has just reiterated that it is the manufacturer's responsibility to gather evidence and that the evidence requirements for overseas suppliers must be equivalent to those in the UK, but has clarified the position for joint and several liability for importers. The Government says recognises the need for more detail on how the import processes will work in practice, and guidance will be published in due course.
  3. Disagreed around the disproportionate arrangements for joint and several liability for online marketplaces – we recommended a notice-based mechanism similar to that used for suspected VAT non-compliance – Government intends to limit joint and several liability to “where they knew that clients are not complying with the tax and have not taken steps to ensure compliance or to stop dealing with that client. The Government will work further with the sector on what constitutes due diligence in establishing whether the tax has been properly accounted for and will publish guidance on this in due course.
  4. Disagreed with the proposal to have a visible fee for payable plastic packaging tax on sales invoice. The Government believes that it will aid transparency to show the amount of tax paid on the invoice issued by the taxable person and will further incentivise businesses to incorporate recycled plastic and reduce their costs. However, Government has clarified that this will only apply to B2B invoices.
  5. Disagree with the calculation methodology - it would be easier to report on the total annual mass of packaging rather than item by item and called for alignment with Defra proposed approach for Extended Producer Responsibility for packaging - Government said there was broad support for its proposals so will proceed with quarterly reporting as planned.

Additional notes from the Treasury's consultation response

  • The definition of plastic may end up differing from the EU’s, which is not yet finally agreed
  • Bio-based, biodegradable and compostable plastic packaging will still be subject to the tax – but this position will be reviewed following further discussion with bioeconomy industry and research
  • Overseas taxpayers (importers) will need to have a UK tax representative.
  • Many respondents said they would use a third party to help them comply.