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A new Plastic Packaging Tax in the UK

20 January 2021
HMRC has published long-awaited draft legislation and a policy paper for the introduction of a new plastic packaging tax from April 2022.

In the drive towards promoting a truly circular economy and tackling single use plastics, the United Kingdom (UK) Government issued draft legislation towards the end 2020 outlining a new  plastic packaging tax which will apply to plastic packaging produced in, or imported into, the UK.  The tax will apply with effect from 1 April 2022.

For the purposes of the new tax, 'plastic packaging' is packaging that is predominantly plastic by weight.  The current proposal is for a tax of £200 per metric tonne.  Plastic packaging tax will not apply to any plastic packaging containing at least 30% recycled plastic, or any packaging which is not predominantly plastic by weight.  Imported plastic packaging will be subject to plastic packaging tax, whether the packaging is unfilled or filled.

The UK Government has stated that the aim of this new tax is to provide an economic incentive for businesses to use recycled material in the production of plastic packaging, which will create greater demand for this material. In turn, this will stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfills or incineration.

Plastic packaging tax will affect UK producers of plastic packaging, importers of plastic packaging, business customers of producers and importers of plastic packaging, and consumers who buy goods which are packed in plastic packaging in the UK.  Many manufacturers and importers of plastic packaging components will be liable to register for, and to account for, plastic packaging tax.  There will be an exemption for producers and importers of small amounts of plastic packaging (those who manufacture or import less than 10 metric tonnes in a 12 month period) to mitigate against disproportionate administrative burdens in comparison to the tax liability.

Many businesses are already shifting to use more recycled plastic or alternatives to plastic in their packaging.  It is presenting opportunities for design and innovation in the packaging of goods and a proactive approach to managing this tax may give business a leading ESG edge.  In order to minimise the effect of the tax on your business it will be necessary to consider the composition of the plastics used in and by your business.  Businesses should review their supply chain and establish who is liable for this new tax.  

Related news article: The Scottish Government is proposing to increase the carrier bag charge to 10p from 1 April 2021, read more >

Should you wish advice on how this tax might apply to your business please contact Caroline Colliston or a member of our UK tax team.

Further Reading