Get your business ready for the Plastic Packaging Tax

HMRC have issued a new policy paper ‘Get your business ready for the Plastic Packaging Tax’ advising businesses who will be affected by the new tax how to prepare for it.

The Plastic Packaging Tax is due to take effect from April 2022, though it is not yet law, and the details may still change. Its aim is to encourage the use of recycled rather than new plastic within plastic packaging and to promote increased recycling and collection of plastic waste, reducing the need for landfill and incineration.

• The tax will apply to plastic packaging manufactured in or imported into the UK, where the plastic used within its manufacture is less than 30% recycled.
• The rate of tax is to be £200 per metric tonne of plastic packaging.
• Business customers can be jointly and severally liable if the supplier fails to account for and pay the tax. This includes non-resident suppliers.

The policy paper advises businesses to check now:

• Whether they will need to register and pay the tax.
  • Businesses manufacturing or importing 10 or more tonnes of plastic packaging over a 12-month period will need to register even if no tax will be due and/or the plastic used is more than 30% recycled.
    • This includes non-resident businesses importing into the UK.
• Whether they will need to keep records and how they will keep them:
  • All businesses manufacturing or importing plastic packaging must keep records of the packaging they manufacture or import.
  • The requirements will be less onerous for those businesses below the ten-tonne threshold who are not required to register. More details will be released about this but they need to be able to show they are below the threshold.
  • Records must be sufficient to allow businesses to calculate the tax due or confirm they have nothing to pay.
  • Businesses responsible for accounting for the tax must show it on invoices to their business customers, which may require changes to accounting software.
• Whether they can use more recycled plastic to take themselves out of the tax.
• Whether they are exporting goods liable for the tax:
  • Where goods are intended for export, the tax can be deferred for up to 12 months from the point of manufacture or import. No tax will be due if the goods are exported within that 12-month period.
  • Businesses must keep sufficient records to show the goods have been exported.

HMRC have promised more detailed guidance during 2021 ahead of the introduction of the tax in 2022.

Useful guides on this topic

Plastic Packaging Tax
What is Plastic Packaging Tax? Who does it apply to? Are small businesses subject to Plastic Packaging Tax?

Going Eco: Ten steps to a climate-friendly business
What can you do and, what tax incentives are currently on offer, to assist you in running a more climate-friendly business?

External link

HMRC policy paper: ‘Get your business ready for the Plastic Packaging Tax’