Plastic packaging tax could you be liable to someone else's tax bill

18 March 2022

On 1 April 2022, the UK government introduced a new plastic packaging tax (PPT) to combat the use of single use plastic and encourage greater reliance on recycled plastics. PPT does not just affect manufacturers of plastic packaging; importers of plastic packaging materials will also be affected. Time is running out to prepare, so make sure your business is ready for PPT and its considerable record keeping requirements.

How does PPT work?

PPT will be payable on any plastic packaging that is produced in or imported into the UK and does not contain at least 30 per cent recycled plastic. For the purposes of the new tax, ‘plastic packaging’ is defined as packaging that contains more plastic, by weight, than any other substance, and designed for the containment, protection, handling, delivery or presentation of goods.

PPT is payable by the manufacturer or importer and currently applies at a rate of £210.82 per metric tonne. 

Registration for PPT is a mandatory requirement for any organisation that manufactures or imports more than 10 tonnes of plastic packaging in a 12-month period, regardless of the amount of recycled plastic it contains. However, once registered, only plastic packaging that does not contain at least 30 per cent recycled plastic will be liable to tax. Even if PPT is not ultimately due, all organisations importing or manufacturing plastic packaging must comply with the record keeping requirements, so it is important to consider compliance obligations in advance. 

It is also important to note that manufacturers and importers will be liable to the levy whether the plastic packaging is filled or unfilled. For example, if a business imports fizzy drinks in plastic bottles or ice cream within a plastic tub (with less than 30 per cent recycled content), the plastic bottles/tubs will need to be separately identified for the purposes of PPT.

There will be some exemptions: for example, PPT will not be due on plastic packaging that comes into direct contact with medicines (such as blister packs for tablets) or containers designed to be used with the goods throughout their lifetime, such as power tool boxes, glasses cases or video game cases.  

HMRC will have the power to apply fixed or daily penalties for failure to comply with the new rules and, in some cases, find businesses joint and severally liable for PPT unpaid by suppliers. 
The Government has promised further legislation and guidance later this year to confirm and clarify some finer details of the tax.

Who will be affected by PPT?

Plastic packaging is used in a wide variety of sectors so PPT has a broad impact. Examples of businesses likely to be affected include:

  • retailers - importing products such as bin liners, sandwich bags, water/fizzy drinks bottles, and carrier bags;
  • manufacturers – manufacturing or importing plastic packaging materials and components;
  • publishers – importing plastic materials used for laminating books or applying plastic sleeves to magazines;
  • freight transport providers - importing plastic packaging materials for transportation (eg bubble wrap, pallet wrap etc); and
  • fresh food producers - importing plastic packaging to seal their products.

Record keeping and administration

Businesses that fall within the scope of PPT must ensure that their systems are able to monitor and document the amount of plastic packaging that they produce or import. It may also be necessary to obtain documentation from suppliers confirming the amount of recycled content in plastic packaging imported into the UK.

In order to manage the administration involved with PPT, ensure record keeping and compliance obligations are met, and to avoid penalties, businesses should take steps to establish whether and how PPT applies to them. The following action points should be considered.

  • Carry out an assessment of whether and to what extent they will have a liability to PPT.
  • Review supply chains to consider whether efficiencies can be achieved.
  • Create systems to ensure compliance with the new record-keeping requirements.
  • Decide who will be responsible for PPT compliance.
  • Consider staff training in relation to the PPT rules.

For more information, please get in touch with Anne Holt, Grace King, or your usual RSM contact.

Sarah Halsted
Sarah Halsted
Technical Associate Director
Sarah Halsted
Sarah Halsted
Technical Associate Director