Food and Drink update: Plastic packaging tax – Are you ready?

Published: Tuesday 11 January 2022

In Budget 2018, the Government announced that a plastic tax would come into force from April 2022. The UK plastic packaging tax (PPT) is set to come into force from 1 April 2022 and will require process and operational changes for many food and drink businesses. 

The plastic bag tax that was introduced in 2015 had a dramatic impact on consumer behaviour and the use of plastic bags in shops, reducing the number given out by supermarkets in the UK from 7.6 billion in 2014 to 564 million in 2019/20. The Government predicts that PPT will have a similar impact on producers.

The PPT mainly focuses on the materials used in the delivery of goods to consumers. Beyond generating revenue, PPT aims to encourage a greater use of recycled plastic, rather than new plastic, in order to:

  • reduce reliance on resource extraction and processing;
  • reduce energy emissions from production;
  • stimulate increased levels of recycling; and
  • maintain the environmental benefits of using light, plastic style packaging in terms of transport and protection of goods.

PPT applies to plastic packaging manufactured in, or imported into, the UK; importantly, this is only where the plastic used in its manufacture is less than 30% recycled. The rate of the tax will be £200 per metric tonne of plastic packaging.

What do you need to do?

1. Register your business
If a business manufactures or imports 10 or more tonnes of plastic packaging over a 12-month period, it will need to register for PPT, irrespective of whether the business will have to pay any tax.

This applies to importers of packaging that already contains goods, such as plastic drinks bottles, chocolate bars and sweets. In this scenario, the tax only applies to the plastic packaging itself.

You can find out more about whether you need to register and how to do it here.

2. Enhance your record keeping
Businesses will need to keep comprehensive records of the packaging they manufacture or import. It is important to note that businesses will need to keep these records, whether they are required to register and pay the tax or not. This is to enable demonstration to HMRC that registration is not required and to help businesses to understand when they may become liable to pay the tax.

Records must show:

  • total amount in weight and a breakdown by weight of the materials used to manufacture plastic packaging;
  • data and calculations used to determine if a packaging component is majority plastic and how much recycled plastic it contains;
  • weight of exempted plastic packaging and the reason for the exemption; and
  • amount in weight of plastic packaging exported, and therefore the allowed relief from the tax.

Given the complexities of the records and calculations, businesses that are affected should consider the impact of these new obligations now, in particular the introduction of new record keeping and invoicing requirements which may require changes to systems and invoicing software. Furthermore, there could be possible changes required in the supply chain to increase the use of recycled materials and subsequently reduce the amount of tax payable.

International operations
For businesses that import plastic packaging, details of the composition of the packaging must be obtained from the overseas manufacturer.

Given growing environmental concerns and the need for many countries to raise revenue, it is not surprising that plastic taxes are also being considered and introduced elsewhere around the world.

Businesses with operations outside the UK should consider the impact of these taxes in other countries where they manufacture and use plastics.

For more information on how the plastic tax could affect your food and drink business, contact Rebecca Copping at rebecca.copping@hazlewoods.co.uk or 01242 680000. 

Key contacts

Rebecca Copping
Rebecca Copping
Associate Partner
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