FAQs – Plastic Packaging Tax
The UK Plastic Packaging Tax directly affects importers and manufacturers of plastic packaging in the UK. Below are the answers to common questions the team at Ecoveritas gets asked in relation to this latest legislation.
What is the Plastic Packaging Tax and who does it affect?
The UK Plastic Packaging Tax (PPT) came into force on April 1 and applies to any UK business that manufactures or imports 10 or more tonnes of plastic packaging per year. The tax is due on finished plastic packaging components that contain less than 30% recycled plastic and is charged at a rate of £200 per tonne of packaging.
The environmental tax forms part of the UK Government’s bid to tackle avoidable plastic waste and aims to drive real and lasting change in the packaging industry.
The government estimates the use of recycled plastic in plastic packaging could increase by approximately 40% as a result of this tax.
Who is exempt from the tax, and do they need to take any action?
There are four categories of packaging exempt from the tax. They are products:
- used for the immediate packaging of licensed human medicine
- permanently recorded as set aside for non-packaging use
- used as transport packaging to import multiple goods safely into the UK
- used in aircraft, ship and rail goods stores
Exempt packaging which counts toward the 10-tonne threshold for registration:
- Plastic packaging used for human medicinal products, and plastic packaging permanently recorded as set aside for non-packaging use, must be included when working out the total weight of packaging manufactured or imported.
Exempt packaging which does not count towards the 10-tonne threshold for registration:
- Plastic packaging used for transporting imported goods, and for stores on international aircraft, ship and rail journeys, does not need to be included when working out the total weight of packaging manufactured or imported.
Packaging excluded from the tax
There are three types of products excluded from the tax. These do not need to be included when working out the total weight of packaging manufactured or imported.
They are products which are designed to be:
- used in the long-term storage of goods
- an integral part of the goods
- reused for the presentation of goods
It is also worth keeping in mind that plastic components at all stages of production, including containment, movement, handling, delivery and presentation, are all subject to the tax, which can complicate matters when calculating potential outlays.
What information should businesses be gathering for the tax?
The new tax calls for greater collaboration and transparency within the supply chain. The businesses that manage their data effectively will be able to maintain a clear audit trail and prove, without a doubt, the authenticity of the materials used in their packaging.
The tax returns will require information concerning the weight of:
- Chargeable plastic components that the business has produced or imported
- Non-chargeable plastic components that the business has produced or imported
- Chargeable plastic components where the direct export condition is not met
- Chargeable plastic components produced or imported for which the direct export condition is met
- Plastic components are exempt because they meet the required threshold of 30% recycled content
- Plastic components that are exempt through current PPT legislation
Once registered for the tax, you’re required to keep the records for at least six years following the end of each accounting period.
In summary, the records are:
- Weight details of each plastic packaging component
- Details of the weight of plastic packaging exported, if applicable
- Evidence of recycled content, including how you’ve worked out the percentage of recycled plastic, its source, and what product lines the content is used with
- Evidence of why an exemption applies (e.g. packaging for medicine used for human medical products).
Notably, you should keep records even if you are below the threshold because of a rolling 12-month time period, so you could subsequently hit the limit and be liable to keep records and pay tax.
What long-term actions would you recommend businesses take (i.e. changing packaging supplier)?
- Assess the likely PPT impact on the business
- Review your supply chain to determine what will be affected and who will be responsible
- Make any required amendments to contracts and pricing
- Engage with customers and suppliers
- Interrogate existing data collection and reporting
- Identify potential gaps in data collection
- Implement required system changes
- Partner with a specialist
Businesses should look to partner with a packaging data specialist that can consistently deliver a highly efficient and transparent service without the need to scale up to meet the requirements.
Ecoveritas offer global data collection and analysis services that can be combined with compliance, guidance and consultancy support. Our range of tools and expertise help businesses navigate the rules of the new legislation. With support, businesses can continue to operate compliantly, competitively and with complete confidence.
The first Plastic Packaging Tax Returns were due on July 29th. Still struggling? Contact the Ecoveritas team at info@ecoveritas.com
