The plastic packaging tax (PPT) is an environmental strategy that is being introduced as of the 1st of April 2022 in the UK. Its aim is to incentivise the use of recycled material in the production of plastic packaging. The legislation provides that tax will apply at a rate of £200/ tonne on plastic packaging with less than 30% recycled plastic manufactured or imported in the UK. This includes packaging on goods which are imported.

In a nutshell, the new tax will be on any material that is designed to hold or carry another item that is made of plastic and/or has a significant portion of plastic all in order to incentivise the use of recycled materials.

What is the aim of the plastic packaging tax?

The government expects that the plastic packaging tax will create an increased demand for recycled plastic. The aim is to therefore divert excess plastic away from landfills or incineration which emits gases into the atmosphere. The plastic packaging tax should also increase the amount of plastic waste that is being recycled which will also support the growth of the UK recycling industry.

Who will the plastic packaging tax affect?

The plastic packaging tax will affect a number of businesses due to the scope of its policies. Registration for PPT is required, even if a business already meets the 30% recycled content threshold and does not need to pay any tax. Businesses that could be impacted therefore need to be aware about the new tax and begin preparing in order to meet their compliance obligations in time for the 1st of April.

Put simply, if your business manufactures or exports more than 10 tonnes of plastic packaging in a 12 month period, you need to register for the PPT tax.

This tax will affect the majority of companies in the following sectors:

  • Packaging and manufacturing
  • Consumer goods
  • Industrial manufacturing
  • Online retail
  • Chemical
  • Pharmaceutical
  • Cosmetics
  • Oil
  • Food and drinks

What do you need to do to prepare for the plastic packaging tax?

The plastic packaging tax creates a need for a system that can collate data for compliance, pricing, contracts and supply chains which of course takes time to put into place. This means that businesses must start planning ahead of time for their strategy so they can still comply with the tax. Most businesses are already taking a look at how they use plastic but, more often than not, it does not involve all key decision makers and stakeholders.

Key actions that businesses need to consider include:

  • Assess the impact of PPT on your business
  • Start a conversation with customers and suppliers
  • Assess supply chains to determine where it will be affected and where amendments can be made
  • Review your existing data and how you currently report so you know what needs to change to meet PPT obligations
  • Assign roles and responsibilities within your team
  • Implement required changes to systems so that you can collect the necessary data

How do you register for plastic packaging tax?

If you are liable for the plastic packaging tax, you will be able to register from the 1st of April 2022. To register, you may need to provide the following information:

  • Your business type
  • Your business address and contact details
  • The date your business became liable for PPT
  • An estimate of how much finished plastic packaging you expect to manufacture or import in the next 12 months
  • A customer reference number, this could be your; Corporation Tax Unique Tax Reference, Self Assessment Unique Tax Reference, Company Reference Number, Charity Registration Number, National Insurance number or, temporary National Insurance number.

After you have registered for plastic packaging tax

After you have registered for PPT you will receive a reference number which you should keep note of. If your circumstances change or have entered incorrect information, you need to inform the HMRC within 30 days of either the day after:

  • You discover the original information you provided is inaccurate
  • A change in circumstances

If you feel your business could be impacted by the plastic packaging tax and aren’t sure how to register, reach out to the Cooper Accounting team and we will be happy to help.