The Plastic Packaging Tax is designed to encourage the use of recycled rather than new plastic in packaging. It will apply to plastic packaging manufactured in, or imported into, the UK where less than 30% of the plastic used in manufacturing the packaging is recycled. The tax, which applies from 1 April 2022, is set at the rate of £200 per metric tonne of plastic packaging.
If you manufacture or import ten tonnes or more of plastic packaging will need to register for the tax. The registration requirement applies regardless of whether you will need to pay the tax, and applies equally to those of you who import plastic packaging that already contains goods, for example, plastic bottles containing drinks. The online service to register and pay the tax will not be available until 1 April 2022 – the date from which the tax applies.
If you manufacture or import plastic packaging will need to keep records of the packaging that they manufacture or import. While this requirement applies regardless of the amount of plastic packaging that you manufacturers or import, HMRC have stated that they intend to reduce the record keeping requirements where the business manufacturers or imports less than ten tonnes of plastic packaging a year. When keeping records, you should be able to show the amount of recycled plastic that the packaging contains – plastic packaging is assumed not to meet the 30% recycled plastic test unless it can be shown that it does.
If you supply packaging which includes recycled plastic you may need to provide more information to your customers about the type and qualities of the materials that they supply.
If you are within the scope of the tax, any invoice that is issued to a business customer must include a statement that Plastic Packaging Tax has been paid on the packaging concerned.
Those of you within the ambit of the new tax should start to plan ahead for its introduction. You may wish to consider a move to using more recycled plastic in your packaging to reduce the amount of the tax that they will have to pay.
Written by the Tax Advice Network