The Plastic Packaging Tax (PPT) came into force from 1 April 2022, applying a £200 per tonne tax on new plastic packaging. The rate increased from 1 April 2023 to £210.82 per tonne.
The tax requires that businesses that have manufactured or imported 10 tonnes or more of finished plastic packaging components within the last 12 months, 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.
The introduction of PPT was the first step towards making organisations take more responsibility for the packaging they produce and use, in the journey towards a more eco-friendly approach to packaging across the UK.
The next step is to introduce the extended producer responsibility (EPR) reporting so that the full cost of collection, sorting, recycling, and disposal of household packaging waste will be covered by producers rather than the taxpayer.
So what should you be doing to ensure your business is compliant with these regulations?
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.
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.
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.
Records must be kept for at least six years from the end of the accounting period and must include:
Evidence must be held to support any exemptions claimed or the percentage of recycled plastic content.
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.
New regulations relating to Extended Producer Responsibility come into effect from January 2024 but businesses need to take action now as these regulations apply to a much wider range of businesses.
EPR will apply to businesses that meet all of the following conditions:
Note that the threshold relates to the calendar year, rather than the 12 months immediately prior, and also the higher threshold of 25 tonnes of packaging compared with the Plastic Packaging Tax threshold.
This responsibility relates to all types of packaging and therefore has much wider implications than solely plastic packaging.
Under the new regulations, you will need to collect and submit data on the packaging you handle and supply and pay a waste management fee. This is calculated by reference to the prior year’s data, which is why records need to be kept from 1 January 2023 or 1 March 2023.
The Environment Agency offers information relating to the new reporting responsibilities including an online service to determine if your business will be required to make these reports in 2024.
If you’d like advice about the PPT and other taxes, contact us to find out how we can help you.