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Everything You Need To Know About Plastic Tax

  • 21st December 2021
  • 6 min read

A new plastic tax is coming to fruition in April 2022 and is set to impact any consumers who buy plastic packaging or goods in plastic packaging, importers and manufacturers of plastic packaging and business customers of manufacturers and importers of plastic packaging in the UK.

As this plastic packaging tax fast approaches, many manufacturers and companies across a wide range of industries are struggling to understand the exact implications this levy will have on their business.

To help you understand the plastic packaging tax and integrate a more sustainable packaging process, we’ve pulled together this guide. 

What is the aim of the plastic packaging tax? 

The aim of the plastic levy is to reduce the amount of non-recyclable plastic ending up in landfills and to help reduce carbon emissions.

Whilst this measure isn’t thought to have notable macroeconomic impacts, this levy is a great incentive for companies to transition over to recycled plastic packaging. This, in turn, will create incentive and significant demand for plastic with over 30% recycled material, therefore stimulating greater levels of recycling.

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Who will be affected by the plastic tax? 

From the 1st of April 2022, businesses of all sizes dealing with plastic packaging will need to register with HMRC. This includes everything from supermarkets to retailers, manufacturers and packaging companies.

However, importers and manufacturers who deal with less than 10 tonnes of plastic a year do not need to register with HMRC. The test for this is both retroactive and future-looking. This is put in place to help mitigate any administrative burdens that will be disproportionate in comparison to businesses dealing with larger amounts of plastic. 

Registering for the plastic packaging levy

HMRC expects companies who deal with at least ten metric tonnes of plastic packaging within 30 days of 1st of April 2022 to register with them. Registration must happen within 30 days of 1st April 2022. 

This also applies to importers and manufacturers who have dealt with more than ten metric tonnes of plastic packaging in a 12-month period and ends on the last day of a calendar month (for example, 22nd of April 2021 to 30th of April 2022). 

Find out more about registering for Plastic Packaging Tax here.

How much will the plastic packaging tax cost businesses? 

Any company that’s manufacturing or importing plastic into the UK  will be charged £200 per metric tonne of plastic packaging that contains less than 30% of recycled plastic. 

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What materials and products will be impacted? 

Any plastic packaging that contains less than 30% recycled packaging will be levied. So, any packaging that’s predominantly plastic by weight will be taxed. This includes plastic drinks bottles, food wraps and film. 

Organic plastics may also incur tax. At present, if you’re using green packaging that’s compostable or recyclable and has less than 30% recycled plastic, you will be taxed. However, this is being reviewed by the government and could change at a later date. 

Will there be an economic impact? 

Whilst we won’t know the economic impact of the plastic levy until it has been in place for a while, the tax should increase the demand for recycled plastic and therefore the amount of plastic being recycled, reducing the amount of plastic ending up in landfills. 

There may be a shift in workplace culture, as it is thought that this will impact an“estimated 20,000 manufacturers and importers of plastic packaging.” The Government also predicts there will be one-off costs for companies as they familiarise themselves with the regulations, register with HMRC, get their reporting in place and train their staff. 

Behavioural responses to the tax incentive will also be taken into consideration, including smaller actions such as reducing the use of plastic packaging use, and reduced levels of productions containing plastic packaging being purchased. 

What happens if you don’t comply with the tax?

The government will enforce anti-avoidance rules for businesses trying to avoid this tax. 

If you don’t register with HMRC, fail to comply, file your returns or do not pay, there will be a penalty. 

What’s exempt from the plastic packaging tax? 

There are some instances where certain uses of plastic packaging won’t be levied. This includes packaging that is used: 

  • For licensed human medication, first aid boxes or any products that fall within regulation 2 of the Human Medicines Regulations 2012
  • As transport packaging for goods into the United Kingdom. 
  • Packaging that is used on railway stores, aircraft and ships going on international journeys. 
  • That is permanently designated for use other than a packaging use (this doesn’t include protection, handling, delivery or presentation).
  • Exported goods that are transported overseas within 12 months. 
  • Other products such as CDs, DVDs and game cases, printer and toner cartridges and toolboxes are also exempt from the tax. 
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Will the plastic tax impact consumers? 

In theory, the plastic packaging tax shouldn’t impact B2C customers unless companies choose to pass this charge on in their pricing. However, this cost can be passed along the supply chain and ultimately impact consumers.  Should you choose to incorporate the cost of the plastic tax, then they would feel the impact. 

Speak to a packaging expert

The best way to understand the impact this may have on your company and avoid a hefty tax bill is to speak to a plastic packaging consultant. A lot goes into choosing the right packaging for your product, so it’s important to make sure you’re following government guidelines and opting for packaging that protects your product and is cost effective. Find out more about how to effectively package your products.

Businesses such as Titan Packaging will review your packaging process from start to finish and help you transition to a more sustainable, cost-effective packaging process that follows the plastic tax guidance. Get in touch

Written by: Samantha Hanson Procurement Director

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