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How the Plastic Packaging Tax works

| Duncan & Toplis | 11 April 2022

The Plastic Packaging Tax (PPT) came into force from 1 April 2022, applying a £200 per tonne tax on new plastic packaging.

The tax requires that businesses that have manufactured or imported 10 tonnes or more of finished plastic packaging components within the last 12 months (from 1 April 2022 onwards), or which expect to do so in the next 30 days, will need to register, account for the tax due on quarterly returns and retain detailed records.

The UK generates more than two million tonnes of plastic packaging waste per year, with each person throwing away around 36kg on average - the weight of an 11-year-old child. Despite much of it being recyclable, just 45% of this is actually recycled, with the rest going to landfills or joining the eight million tonnes of plastic in the world’s oceans.

It’s hoped that the new Plastic Packaging Tax can help reduce this by incentivising the use of recycled plastic and reducing the amount of plastic that’s used in packaging. As such, it’s an important change for businesses to be aware of, and there are civil penalties for failing to comply with the tax. This includes penalties for failure to register, file returns or pay the tax, starting with a £500 fixed penalty which increases by £40 per day for continued failure.

So what should you be doing now to ensure your business is compliant with these new regulations?

Work out which of your packaging is subject to PPT

Any polymer material to which additives or substances may have been added is subject to PPT, and this includes polymers that are biodegradable, compostable, or oxo-degradable.

The exception to this is any product that contains 30% or more recycled plastic. This plastic is not chargeable for the tax, however, it will still count towards the 10-tonne registration threshold. There are some other exceptions based on the use of the packaging, including some transport packaging and packaging used for medicinal products.

Work out the weight of the packaging you manufacture or import

This must be calculated in metric values, per component. The five methods which can be used for this are individual component, sample component, material inputs, verified specification or bulk weighing.

Check when you must register for the tax

HM Revenue and Customs (HMRC) PPT registration threshold tests can be found here. These are similar to the VAT registration tests and involve looking back over the past 12 months and forward over the next 30 days. You should ensure that you register for PPT at the required time to avoid penalty charges.

Check what records and accounts you must keep

Records must be kept for at least six years from the end of the accounting period and must include:

  • A breakdown of the weight of any plastic packaging components finished or imported in the period
  • The weight of plastic packaging exported on which relief has been claimed (where applicable)
  • A breakdown of the weight of any plastic packaging for which a credit is being claimed
  • Any adjustments being made to previous periods (which must include the date and period they relate to).

Evidence must be held to support any exemptions claimed or the percentage of recycled plastic content.

Complete your returns and make payment

The returns cover fixed accounting periods, which are the quarters ending 30 June, 30 September, 31 December, and 31 March.

The return for each period must be submitted, and any tax due paid, no later than the last working day of the month following the end of the accounting period being reported. For example, the deadline for the 1 April – 30 June return will be 31 July.

If you’d like advice about the PPT and other taxes, contact us to find out how we can help you.

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