PLASTIC TAX 2022
What is the Plastic Packaging Tax?
The Plastic Packaging Tax is a first attempt at a tax of its kind, which directly taxes plastic packaging materials.
The tax was implemented on 1st April 2022 and applies to plastic packaging which has been manufactured in, or imported into the UK and does not contain at least 30% recycled plastic.
- To avoid the tax, products must be made from a minimum of 30% recycled content.
- The cost of this tax will be £200 per tonne.
- Applies to businesses that manufacture or import 10 or more tonnes of plastic packaging over a 12-month period.
- Packaging is considered plastic if it is predominantly made from plastic by weight.
- Plastic packaging that is subject to the tax includes biodegradable, compostable, bioplastics and oxo-degradable packaging.
- Recycled content includes both post-industrial and post-consumer waste. However, ‘recycled plastic’ does not include scrap or regrind recovered and reused during the manufacturing process. It must be reprocessed to qualify as recycled plastic.
Why is it being introduced?
Plastic pollution is very quickly becoming one of the greatest threats to our environment and our health, with 8 million tonnes of plastic entering our oceans every year. Since its emergence in the 1950s, a shocking 79% of all plastic has ended up in landfills or the environment.
Essentially, the aim of the Plastic Tax is to change this typical route of plastic disposal and drive recycling technologies within the UK. The idea is that the Plastic Tax will drive demand for increased recycled content, thus creating an incentive for businesses to utilise recycled plastic at the manufacturing stage.
Therefore, Plastic Tax aims to combat the plastic pollution crisis by redirecting plastic away from landfill or incineration, and encouraging the transition to a more circular economy.
What does this mean for my business?
If your business is liable to register for the Plastic Packaging Tax, i.e. you import or manufacture over 10 tonnes of plastic packaging per year, then you must register with HMRC, providing:
- The name and address of the business
- The VAT or Corporation Tax number, if applicable
- The number of tonnes of plastic packaging imported or manufactured in the last 12 months
- The person responsible at the business
- The addresses of sites where plastic packaging is manufactured or imported to
- Their bank details
- A PRN producer registration number if the business has one
You must also keep records, collecting and reporting data.
It is advised that you keep records irrespective of whether you are liable to paying the tax or not, especially if you handle plastic packaging near to the 10T threshold.
As the new tax is introduced, companies using plastic packaging with less than 30% recycled plastic content will incur greater charges. As such, each individual company’s costs will vary greatly depending on the nature and quantity of the packaging materials they are using. Determine your company’s Plastic Tax costs below using ComplyDirect’s free calculator: https://forms.complydirect.com/plastic-tax-calculator
How can Hazel 4D help?
The introduction of such taxes creates opportunities for companies to find more sustainable and cost-effective options, with lower costs for both business and the planet. By being aware of upcoming changes to legislation, you have the time to prepare, and the ability to find more eco-friendly and cost-effective products.
Here at Hazel 4D, we offer many sustainable alternatives, with paper-based products, products with a minimum 30% recycled content, and 100% recyclable products. Look for the icons on our shop to see our plastic tax-exempt products.
For products where the below 30% recycled content option may be the most suitable for your business, we can work with you to reduce your plastic waste by dramatically reducing the amount of film being used, whilst simultaneously improving load stability and reducing costs. This will ultimately reduce the costs associated with the Plastic Packaging Tax because your plastic usage will be reduced significantly.
PLASTIC TAX FAQ’s
What determines whether a plastic packaging product is liable or exempt for the tax?
Plastic packaging is defined as a product that is suitable for use alone or in combination with other products in the protection, handling, delivery, or presentation of goods at any stages of the supply chain, from the producer of goods to the consumer.
A plastic packaging product is liable for the tax if it does not contain a minimum of 30% recycled content and does not meet any of the exemption criteria (see below).
Plastic packaging includes biodegradable, compostable, bioplastics and oxo-degradable packaging. Recycled content includes both post-industrial and post-consumer waste.
Who is liable for the tax?
From 1 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.
If the above conditions are met, it is necessary to register even if you are not required to pay any tax.
Some packaging which is exempt from the tax will still need to be included in your calculation towards the 10-tonne threshold. Find out more about exempt packaging which counts towards the 10-tonne threshold for registration.
How and when will the tax be paid?
The tax will be paid by the importer or manufacturer of the product, and it will be paid using a tax return system similar to the current VAT return model.
What is the Government’s professed purpose for the tax?
In response to the global plastic pollution crisis, whereby plastic waste is infiltrating ecosystems and harming the environment, the Plastic Packaging Tax is a core element of the UK Government’s sustainability policy.
The aim of the tax is to create further demand for increased recycled content within packaging products. Therefore, minimising unnecessary plastic usage and potentially diverting plastics from landfill/incineration, as well as driving innovation in recycling technologies within the UK.
What about products that are part plastic and part cardboard or other material?
A packaging component is plastic if it contains more plastic by weight than any other single substance in the component.
For example, if a 10-gram packaging component is made of 4 grams of plastic, 3 grams of aluminium, and 3 grams of cardboard, then all 10 grams will be considered plastic packaging for the purpose of the tax. Similarly, if the 10-gram packaging component was 3 grams of plastic, 4 grams of aluminium and 3 grams of cardboard, none of the item would be taxable. If the weight of plastic in the component is equal to the weight of another single material used, the component would not be considered as plastic for this tax.
You must keep records as evidence to support the information you submit in your tax returns.
Your records must be kept by reference to each product line and show:
- evidence of any exemptions from the tax
- the recycled plastic content, if 30% or more of the plastic used in the component is recycled
For example, if you claim an exemption from Plastic Packaging Tax on the basis that the plastic packaging is used for the immediate packaging of human medicine, you need to hold information supporting your claim (such as the license numbers of the medicines involved).
What about packaging that has not been used, but is already in our warehouse ready for use?
If packaging has already been imported into or manufactured in the UK before 1st April 2022, then it will not be liable for the tax.
Are there any exclusions to the tax?
There are 4 categories of packaging exempt from the tax. They are products designed to be:
- used for the immediate packaging of licensed human medicine
- permanently recorded as set aside for a non-packaging use
- used as transport packaging to import multiple goods safely into the UK
- used in aircraft, ship, and rail goods stores
Find out more information here: https://www.gov.uk/guidance/check-which-plastic-packaging-is-exempt-from-plastic-packaging-tax
Are there plastic tax-exempt equivalents for all the virgin plastic products that you supply?
Yes – we either have recycled content or a paper alternative.
When I buy from Hazel 4D, will I be charged the Plastic Packaging Tax?
For all applicable packaging products (made from plastic with less than 30% recycled content), Hazel 4D will have already paid the Plastic Tax, and this will be reflected in the price of our products. Our customers will not be charged any additional Plastic Packaging Tax when ordering products, as all pricing quotes will have already accounted for the Plastic Tax – so there are no hidden surprises!
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