As of April 2022, UK producers of plastic packaging, businesses that buy plastic packaging, importers of plastic packaging, and consumers who purchase goods in plastic packaging will be taxed if the plastic packaging contains less than 30% recycled plastic. Filled and unfilled packaging will be taxed.
Importers and producers of small quantities of plastic packaging will be exempt from mitigating against disproportionate administrative burdens.
The tax won’t apply to plastic packaging that isn’t predominantly plastic by weight or contains over 30% recycled plastic. It also won’t apply to packaging of licensed human medicines, transport packaging to import products into the country, and exported (filled or unfilled) plastic packaging.
On November 12, 2020, HM Revenue & Customs published draft legislation of the new plastic packaging tax and a policy paper on its introduction.
The draft legislation is being published for technical consultation. It sets out the following key features of the tax:
- A tax rate of £200 per ton for packaging containing less than 30% recycled plastic
- A ten-ton registration threshold of plastic packaging produced in or imported into the UK per year
- The scope of the tax in regards to the type of taxable product and recycled content
- The exemption for importers and producers of small quantities of plastic packaging
- Who will be liable to pay the tax
- Who will need to register with HMRC
- How the tax will be enforced, collected, and recovered
- How the tax will be relieved on exports
The tax should push businesses to use recycled material in the production of plastic packaging.
The HMRC policy paper reads:
The tax will provide a clear economic incentive for businesses to use recycled material in plastic packaging, which will create greater demand for this material and in turn stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.
It should also stimulate the collection and recycling of plastic waste.
HMRC says:
Recycled plastic has a carbon footprint that can be up to four times lower than that of virgin plastic. The policy may also help divert plastics from landfill or incineration, and drive recycling technologies within the UK.
An estimated 20,000 importers and producers of plastic packaging will be impacted. Consumers might, but the impact will be minimal.
HMRC says:
It’s expected that if all the tax is passed on to individual consumers, the cost to consumers will be small as plastic packaging usually makes up a minimal amount of the total cost of goods.
Failing to comply with the tax will result in civil and criminal penalties in line with other taxes. There will be a penalty for failing to register, file returns, and pay the tax.
