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Written by: Grace King

Grace King

Manager, VAT

Plastic packaging tax anomalies may cause problems for businesses

The government’s new Plastic Packaging Tax, intended to encourage the use of recycled plastics instead of single use plastics, will come into force on 1 April 2022. 

Having set out the basics of this new tax last year (see RSM’s previous coverage: Plastic packaging tax – are you ready for April 2022? and Plastic packaging tax – HMRC sets out compliance framework), HMRC has published a swathe of further guidance on its day-to-day practicalities. 

More information will follow in RSM’s Weekly Tax Brief soon, but in the meantime, here is a flavour of just how tricky it may be for importers and manufacturers to work out whether their product will be covered. 

HMRC’s latest guidance includes information on plastic packaging items that will be exempt from the tax because they form an integral part of the goods (such as the plastic casing of an ink cartridge for a printer). This gives some remarkably precise and seemingly nonsensical examples of items that are covered by the tax and those that aren’t, including: 

  1. A lipstick mechanism and case are exempt from Plastic Packaging Tax, but the cap is taxable.
  2. A mascara brush, wand and cap are exempt, but the bottle is taxable.
  3. A pump container for toothpaste is exempt, but the toothpaste tube is taxable, as are liquid soap pumps.
  4. The roller ball of a roll-on deodorant is exempt, but HMRC makes no mention of the container itself or the lid, if they are also made of plastic. 
  5. HMRC says that coat hangers ‘designed for use in the supply chain’ are taxable, but doesn’t explain what this term means, or clarify whether coat hangers that will be continually reused for retail displays might be exempt. 

With such anomalies coming to light at this stage, it seems this new tax may prove to be even more of a headache to implement for manufacturers and importers than was first thought.

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