New Plastic Packaging Tax

The UK government is keen for businesses and consumers to use recycled materials wherever possible. Therefore, on 1^st April 2022, a new tax on plastic packaging was introduced. The hope is that this will provide an economic incentive for businesses to use recycled material in the production of their plastic packaging, which will create a greater demand for this material, resulting in increased levels of recycling and collection of plastic waste. This in turn will ensure that those materials are diverted from landfill sites and incineration. 

How much is PPT?

Plastic Packaging Tax (PPT) applies to plastic packaging that is manufactured in, or imported into the UK, that does not contain at least 30% recycled plastic.  Plastic packaging is packaging that is predominantly plastic by weight. It will not apply to any plastic packaging which contains at least 30% recycled plastic, or any packaging which is not predominantly plastic by weight.

The tax is charged at a rate of £200 per metric tonne of chargeable plastic packaging components within a single specification. The government will keep the level of the rate and threshold of PPT under review to ensure that the tax remains effective in increasing the use of recycled plastic. 

However, this measure is not expected to impact individuals unless businesses pass on the charge. It is expected that even if all the tax is passed on from suppliers to individual customers, the cost to those customers will be small as plastic packaging usually makes up a very small amount of the total cost of goods.

Chargeable plastic packaging components

A ‘packaging component’ is a product that is designed to be suitable for use, whether alone or in combination with other products, in the containment, protection, handling, delivery or presentation of goods at any stage in the supply chain.  This is a wide definition and may apply to items that you would not initially consider categorising as ‘packaging’, such as plastic hangers. A “plastic packaging component” is a packaging component that contains more plastic, when measured by weight, than any other single substance.

The tax therefore has a limited scope, as it applies to packaging only and excludes non-plastic items, which could result in businesses substituting plastic packaging for other potentially less environmentally efficient materials.

Exemptions

Plastic Packaging Tax (PPT) is not applicable to the following categories of packaging:

• Transport packaging used when importing goods from the UK (i.e. packaging used to protect any goods during a journey); 
• Packaging products used in aircraft, ship or railway stores for international journeys; 
• Packaging used for human medicine; 
• Components that are permanently designated for packaging use (i.e. the plastic film that is used to coat white boards);
• Where the packaging function is secondary to the storage function (i.e. drill case, glasses case);
• Packaging that is considered an integral part of the goods (i.e. an ink cartridge or an inhaler); and
• Packaging designed primarily for the presentation of goods (i.e. display shelves). 

So what do I need to do?  

As of the 1^st of April 2022, you must register for Plastic Packaging Tax if you’ve manufactured or imported 10 or more tonnes of plastic packaging within the last 12 months, or if you plan to do so in the next 30 days. You can register on the HMRC website here.

To find out whether you need to register for Plastic Packaging Tax and for more information and guidance on the steps to take if so, please visit the government website page here.

Preparing for the Plastic Packaging Tax involves both pragmatic planning as well as an inspection of your existing suppliers and processes. This is especially the case within the catering function of your organization whereby you may be dealing with more significant amounts of plastic packaging. 

To ensure you are best prepared under this new legislation, here are a number of ways that you can make changes, to alleviate any pressures this Plastic Packaging Tax may cause you in your procurement process:

• Switch to recycled materials so the tax doesn’t apply. This is, of course, the intention of the tax. Indeed, the government believes it will affect just 20,000 businesses across the UK because many will either be prompted to use sufficient recycled materials, or have already done so.            
• Speak to your suppliers. They’ll undoubtedly already be aware of the tax, but they may not know that you wish to avoid it. Needless to say, some suppliers may be planning on some of their customers being ignorant of the new tax in order to perhaps offload older taxable stocks. CPC suggest that our members speak with their suppliers to understand the implications on the tax for them and if costs will be passed down the supply chain. 
• Keep an eye on developments. The story of the Plastic Packaging Tax is still being written and guidance is subject to change until all the legislation is approved by Parliament. Therefore, it will continue to be updated. Keep an eye on the government’s main plastic packaging tax website here.

 

We would also like to advise members to proactively seek methods of how plastics can be removed at their institutions and within their own supply chain to future proof against future costs rises. More importantly, from a sustainability point of view, we hope that members will use this opportunity instil good practice to try and eliminate unnecessary plastic usage.

	Materials	Who has to pay?	Who has to be paid?	Effetive Date	Registration Required?
PPT	Plastic packaging manufactured in, or imported into, the UK, where the proportion of recycled plastic in the component, when measured by weight, is less than 30% of the total amount of plastic in the component	UK importers and UK manufacturers	£200 per tonne of chargeable plastic packaging components of a single specification	1 April 2022	Yes, if your business manufactures or imports 10 or more tonnes of plastic packaging over a 12 month period
EPR (packaging)	Unrecyclable packaging, categories of materials to be confirmed	UK producers and manufacturers who place packaged products onto the UK market (further details of different categories of 'producer' set out below)	The full net costs of managing packaging waste, further details to be confirmed	Not before 2023	Producers will be required to register with the Scheme Administrator in 2023 and at this point will be expected to pay registration fees (details to be confirmed)