Plastics tax – what you need to know

The UK recycles a very small proportion of the plastics that are used in packaging each year. The plastic that is not recycled either ends up in landfill or is exported.

Plastics tax – what you need to know

The UK government wants to increase the amount that is recycled and so on 1 April 2022 a plastics tax on plastic packaging containing less than 30% recycled plastic was introduced. The tax covers packaging which is manufactured in the UK or imported into the UK.

The rationale behind the tax is that it will incentivise businesses to use more recycled plastics and for more plastics to be recycled.  The aim is to reduce the environmental impact of plastics rather than revenue generation.

The tax is charged at £200 a metric tonne on chargeable plastic. Registration is mandatory and the threshold for registration is when ten metric tonnes of plastic packaging has been manufactured or imported in a twelve-month period. Once the business is registered, quarterly returns and payments will be required.

It is not always clear what falls with the definition of chargeable plastic but HMRC have given guidance on what packaging does and does not fall within the tax. Items which are chargeable plastic include bottle tops, crisp packages, dosage and measuring devices when used as a cap or lid on a product (e.g. mouthwash) and roasting bags which contain food. Items outside the scope of the tax include bags for life, home storage boxes and reusable dosage or measuring caps which are not used as a lid or cap. It is important for a business to correctly classify its packaging.

There are a number of exemptions including packaging for medical items and a transport exemption where the packaging is used to safely import goods into the UK but is not the main packaging of the goods being imported. Plastic packaging which forms an integral part of the goods is also excluded (e.g. a printer cartridge) as is plastic packaging where the primary function is storage (e.g. CD and DVD cases).

Businesses need to ensure they have reviewed their packaging and identified which elements fall within the legislation, what exemptions are available and, if exemptions are available, whether the packaging still needs to be included in the ten tonne threshold calculation. Records should be kept to show that a business is below the threshold in case of a HMRC enquiry.

Please do not hesitate to contact us should you wish to discuss this further on 01633 810081.