What is the carrier bag charge? Who does it apply to? Are small businesses subject to the plastic bag tax?

A freeview 'At a glance' guide to the plastic bag charge in Scotland.

At a glance

  • A compulsory 10p charge is levied on single-use carrier bags in Scotland.
    • This increased on 1 April 2021 from 5p. 
  • It was originally effective from 20 October 2014.
  • This charge applies to single-use carrier bags supplied with goods, supplied in or delivered from Scotland.

Who does it apply to?

All retailers in Scotland are required to charge a minimum of 10p for each new single-use carrier bag. The charge will be levied on single-use bags made of paper, plastic and some plant-based materials. Whilst the government strongly encourages retailers to donate proceeds from the charge to good causes in Scotland, they are free to use the proceeds as they like.

What about VAT?

  • VAT-registered businesses must account for standard rate VAT on the single-use carrier bag charge, although they can include the VAT element in the minimum charge.
    • For a VAT-registered business charging 10p, the taxable amount will be 8.33p and the VAT 1.67p.
    • Prior to 1 April 2021, the taxable amount was 4.17p and the VAT 0.83p.
  • Suppliers using a retail scheme should ensure that VAT is properly accounted for through their scheme.
  • Non-VAT registered suppliers must still charge the same minimum amount of 10p.

Coronavirus suspension

Due to Coronavirus, the carrier bag charge was suspended for some types of delivery and collection until 31 May 2021. 

Retailers did not have to charge for a carrier bag where they were used for:

  • Grocery deliveries to a customer's home.
  • Collecting groceries ordered ahead of time (e.g. click and collect services).
  • Collection and delivery of takeaway food.

Useful guides on this topic

Carrier Bag Tax
A 5p single-use plastic carrier bag tax was introduced in England in October 2015. From 21 May 2021, it was increased to 10p and extended to all retailers, regardless of size. 

Plastic Packaging Tax (subscriber guide)
What is Plastic Packaging Tax? Who does it apply to? Are small businesses subject to Plastic Packaging Tax?

External links

Legislation: Climate Change (Scotland) Act 2009: Carrier bag charges

Squirrel ad

Are you enjoying our content? 

Thousands of accountants and advisers and their clients use rossmartin.co.uk as their primary TAX resource.

Register now to receive our FREE weekly SME Tax News update