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Introducing the Plastic Packaging Tax

Introducing the Plastic Packaging Tax

If your business imports or manufactures plastic packaging components, or regularly trades with a business that does so, the Plastic Packaging Tax (PPT) needs to be on your radar. 

New Tax

Designed to increase use of recycled plastic, while minimising landfill and incineration, the PPT came into force on 1 April 2022. It applies to what are called finished plastic packaging components containing less than 30% recycled plastic. Packaging designed for use in the supply chain, as well as packaging for single use by the consumer is impacted. It’s not just the import of unfilled plastic packaging that’s within scope: so, too, is filled plastic packaging, from soft drinks in plastic bottles to plastic tubs containing squid.

Does it apply to you?

Significant complexity lies behind the broad overview.

Businesses importing or manufacturing plastic packaging components need to monitor tonnage, registering for the PPT if a specific 10-tonne limit is passed. It should be stressed that businesses may need to register even when they don’t ultimately have to pay the tax. Registration is carried out through gov.uk, and there is then a requirement to submit returns (even if these are nil returns) on a quarterly basis. Where there is a liability to pay tax, PPT is charged at a rate of £200 per tonne.

Entry into the regime creates a new area of compliance, with accounts and records needed to support information submitted in quarterly returns. HMRC has produced extensive guidance on what is involved. It should be noted that appropriate records are required even if there is no PPT to pay, and also to support the position where a business is below the registration threshold. An exemption applies if plastic packaging components contain at least 30% recycled plastic as a proportion of the total weight of plastic: but to claim the exemption, appropriate records are needed.

Even if your business does not need to register for the tax or pay it, it may still need a high level of awareness of the new rules. If manufacturing or importing plastic packaging components, or buying them from another business, there is a requirement to carry out due diligence and record action taken. Failure to do so could result in secondary or joint and several liability for unpaid PPT elsewhere in the supply chain.

In the long run, it’s anticipated that businesses will need to include a statement with their invoice to show that PPT has been paid. Due to take effect in April 2022, the requirement is currently postponed. Businesses are still, however, encouraged to make PPT paid visible to customers.

Working with you

We have only been able to give an overview of the PPT here. What constitutes plastic and packaging, for example, are precisely defined for the purposes of the tax, and we should be pleased to advise further. Do contact us with any questions you may have.

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