Plastic Packaging Tax in UK

What is the Plastic Packaging Tax or PPT?

The UK government are implementing a new tax for Plastic Packaging, which will be made law and forms part 2 of the Finance Act 2021. This applies to any plastic packaging produced in or imported into the UK that does not contain at least 30% recycled plastic. Plastic packaging is packaging that is predominantly plastic by weight.

What is the Government PPT Policy objective?

The tax will provide a clear economic incentive for businesses to use recycled material in the production of plastic packaging rather than new plastics, which will create greater demand for this material and in turn stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration. Ultimately, this is designed and has been created to reduce the impact of global plastic pollution.

When will the tax be applicable from?

The tax will be effective from 1st April 2022 and applied to all finished products that do not contain a minimum of 30% recycled plastic (by majority of weight) either produced or imported into the UK after this date.

What is the PPT rate?

The rate has been set at £200 per tonne or £0.20 per kilo for packaging with less than 30% recycled plastic by overall weight.

Who will pay the PPT within the supply chain when goods are supplied directly by an EU based provider?

The direct responsibility for paying the tax lies with importer of the plastic packaging products or components. Our UK customers will therefore be responsible for both tax submissions and payment of the taxation to HMRC for the applicable products supplied directly via our EU businesses. This should be declared and submitted to HMRC on a quarterly basis.

For products where 30% recycled plastic is not included, each of our customers will be obligated to incur packaging tax at the rate of £0.20 per kg.

Definition of recycled plastic?

To qualify as recycled plastic, it must be plastic waste recovered from either of the following two options:-

Pre-Consumer plastic is plastic that is recovered from waste generated in a manufacturing process and processed by a reprocessing facility. It does not include plastic that is reused in the same process in which it was generated as scrap and from which it was recovered*

Post-Consumer plastic is plastic that is generated by households or commercial, industrial or institutional facilities in their role as end user of the product that can no longer be used for its intended purpose. This includes returns of materials from the distribution chain.

– Either Pre or Post consumer plastics can be used separately or together to form the 30% minimum “recycled plastic” threshold.

– *In-house scrap or re-grind from a manufacturing process will only be considered as “recycled plastic” if it has been reprocessed using a mechanical or chemical process back into its raw form, by way of grinding, re-melting and/or re-granulating.

– It is the responsibility of industrial packaging suppliers and manufacturers and direct importer, to ensure maintained evidence and records of all recycled plastic content used within their Plastic Packaging product.

Primary liability, Secondary liability and due diligence.

The primary liability for PPT lies with the UK manufacturer or UK importer of the plastic packaging. However, others in the supply chain, such as traders, distributors and customers can be made secondarily liable or jointly and severally liable for the tax due.

This would be applicable where they are aware or should have been aware that either PPT has not been paid or whereby the recycled content has been falsely declared and due diligence was not adequately maintained.

Other than where 30% recycled content is used, Is any type of plastic packaging exempt from the tax?

There are 4 types of products which are classed as plastic packaging for the purpose of the tax but are exempted from being chargeable by the law:

– Used as transport packaging on imported goods.

– Used in aircraft, ship and rail goods stores.

– Used in the immediate packaging of a medicinal product. (e.g blister packs for tablets)

– That are permanently designated or set aside for use other than for a packaging use.

PPT credit for exported plastic packaging.

Where directly importing, our UK based customers may be able to subsequently claim a tax credit, if they can provide formal evidence to the HMRC that the plastic packaging has been exported outside of the UK, within a period of 12-months from date of import.

What should our UK based customers do next?

If you import 10 tonnes or more of ALL plastics packaging within a 12- month period you may need to register for PPT after the 1st April 2022.

Prepare for the UK PPT implementation and review stocks and orders to be imported prior to 1st April 2022.

Determine whether the use of Post Consumer Recycled plastic material is allowable for direct or in-direct contact with your products, e.g food, pharma etc. and inform FPS accordingly.

Customer to keep formal records of bags exported outside the UK and submit directly to the HMRC. A reporting table can be provided by FPS if required.

Contact their local FPS Account Manager or Customer Service Representative for any additional support.