Plastic Packaging Tax to take effect in April 2022
A new tax on non-recyclable (single use) plastics will come into force in on the 1st of April 2022. This tax will apply to all plastic packaging which doesn’t contain at least 30% recycled content. Imported plastic packaging will also be subject to this law, whether is it filled or unfilled. This is to encourage the use of recycled rather than new plastic for plastic packaging
One aspect that was expected but has been dropped – at least for now - is a requirement to disclosure the tax on B2B invoices. This week HMRC confirmed that: “In light of helpful feedback from industry, the requirement to include a Plastic Packaging Tax statement with invoices will not be commenced when the rest of the tax takes effect on 1 April 2022.” Businesses have however been encouraged to consider how they can voluntarily address this in the short term.
techUK has previously conducted a consultation with members on the draft legislation and provided an insight into the key features of the tax, but a recap of the key features is listed below along with some commonly asked Qs.
Key Points and Updates
- Tax will apply to plastic packaging manufactured in, or imported into, the UK where the plastic used in its manufacture is less than 30% recycled.
- The rate is £200 per metric tonne of plastic packaging.
- Businesses will need to keep records and, in most cases, register for the tax. This is the case even if all the packaging you manufacture/import contains more than 30% recycled plastic.
- As an example, if you manufacture 10 tonnes of plastic packaging, and 1 tonne contains less than 30% recycled plastic, you will need to pay £200.
- Overseas taxpayers (importers) will require a UK tax representative.
- Bio-based, biodegradable, and compostable plastic packaging will still be subject to tax, subject to review. This is likely to be clarified in the secondary legislation following April 2022.
- The online service to register and pay will be live from 1st April 2022.
If you are a business that manufactures/imports 10 or more tonnes of plastic packaging over a 12-month period, you will need to register for the tax. This is regardless of whether you need to pay any tax. This includes importers of packaging which already contains goods. Where the plastic packaging you import already contains goods, the tax only applies to the packaging itself.
My business manufactures/imports less than 10 tonnes of plastic packaging a year, do I need to register/keep records?
Yes, if you’re a business that manufactures/imports plastic packaging, you must keep records of said packaging. The government intends those businesses that handle less than 10 tonnes of plastic packaging per year be subject to reduced record keeping requirements.
I don’t use plastic packaging so I don’t need to do anything right?
Unfortunately, not. You should keep records proving that you don’t use plastic packaging in case of future requests from HMRC.
My businesses’ plastic packaging contains more than 30% recycled plastic. Do I need to register/keep records?
Yes, all plastic packaging is assumed to not meet the recycled content test unless it can be shown that it does. Registration and record keeping can prove it’s content.
How can I demonstrate use of recycled plastics?
Recycled plastic is defined as plastic that has been reprocessed from recovered material, by using a chemical or manufacturing process, so that it can be used either for its original purpose or for other purposes. This does not include organic recycling.
Businesses must calculate the proportions of recycled plastic content based on single specifications of products manufactured continuously on a production run. All packaging should be uniform in weight (within processing variances and production tolerances) and recycled plastic content calculated as an average across the output.
Having a clear and auditable due diligence trail will be essential in satisfying HMRC that the minimum threshold has been met. If you can’t, you will be liable for the tax. Documents that HMRC have provided as examples of accepted evidence are outlined here: https://www.gov.uk/government/publications/get-your-business-ready-for-the-plastic-packaging-tax/further-information-for-businesses#table-of-records
What are the implications of non-compliance?
Misstatements could result in fine of £20,000 or three times your total plastic packaging tax liability, whichever is greater. Evading the tax could also result in a six-month prison sentence. Smaller penalties, including daily penalties, can be leveled for contravening requirements.
How can I start preparing?
- Start thinking about your strategy for dealing and complying with the tax and how it impacts your wider packaging strategy now.
- Consider new packaging solutions and start working with suppliers to manage your exposure to the tax.
- Design your monitoring, control and reporting processes.
- Keep precise records of the weight of plastics used for each item sold so plastic volumes can be calculated for returns.
- Ensure a robust audit trail for recycled material use.
If you have any further questions, please do not hesitate in contacting techUK’s environmental policy team via [email protected]