Why is the tax being brought in?
From 1st April 2022, the government is introducing the plastic packaging tax. A tax will be applied to some plastic packaging manufacturing and imports (or packaging for which plastic is the main component).
The reason behind this tax is to provide a clear, economic incentive for businesses to use recycled plastic in the manufacture of plastic packaging.
The tax applies to plastic packaging manufactured in, or imported into the UK, that contains less than 30% recycled plastic.
This is slightly different for packing comprised of mixed components (such as cardboard and plastic). In this instance, if the weight of the plastic constituent is higher than the other components then the packaging falls within the scope of the tax.
If the plastic packaging contains at least 30% recycled plastic, or is not predominantly plastic by weight, the tax will not apply.
Senior executive vice president of Veolia Northern Europe Gavin Graveson said the following:
‘The UK’s plastic packaging tax is the right way to start getting businesses to push sustainability up the agenda, but it needs to go further. A tax escalator would make choosing to incorporate recycled content in packaging both economically and environmentally preferable to using virgin materials. Not only could the UK save up to 2.89 million tonnes of carbon emissions every year if all plastic packaging included 30% recycled content, it would also incentivise investment in domestic infrastructure which could make the UK a world leader in plastics recycling.’
What packaging will be taxed?
There are two types of plastic packaging subject to the tax. These are packaging designed to be suitable for use in the supply chain and single-use by the consumer.
Where the tax applies, it is charged at £200 per metric tonne of packaging and affected businesses must register ahead of time and start filing a special quarterly tax return. The requirement to include a statement with your invoice to show that plastic packaging tax has been paid, which was due to commence in April 2022, will be delayed, HMRC has confirmed.
HMRC guidance states:
‘For the purposes of plastic packaging tax, plastic means a polymer material to which additives or substances may have been added. Cellulose-based polymers that have not been chemically modified, such as viscose, will not be treated as plastic for the purpose of plastic packaging tax. Other cellulose-based materials which are chemically modified, such as cellulose acetate, will be considered plastic.’
The threshold is 10 tonnes a year, so if the weight of packaging imported or manufactured is below this weight across a 12-month rolling period, the tax will not apply.
Once a business reaches the 10 tonnes threshold within a 12-month period, they must register for and start applying the tax in the following quarter.
How to register for the plastic packaging tax
To register for the tax on the HMRC website, you need to provide the following details:
- Business type
- Businesses address and contact details
- The date your business became liable for plastic packaging tax
- 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 (UTR), self-assessment UTR (or National Insurance number), company reference number, or charity registration number.
Once registered, you will be assigned a reference number that you should use in correspondence. You must keep records for six years to demonstrate compliance with the rules.
For support with your business tax, Williamson & Croft are here to help. And as always, if you would like any further information regarding the above, please feel free to contact our offices by email info@williamsoncroft.co.uk.