HMRC unveils fresh plastics tax guidance

With implementation of the plastics packaging tax now less than two months away, HMRC has today (3 February) urged businesses to “familiarise” themselves with the tax, and register if needed.

Plastics tax
The Plastics Tax is being led by HMRC and is due come into effect on 1 April

The department has published two fresh sets of guidance to help businesses prepare. Both can be found below and at the end of this article.

The first guidance from HMRC today focuses on whether a manufacturer is liable for the tax and the other on what packaging is within the scope.

Judith Kelly, deputy director of HMRC’s environmental taxes policy team, said: “If you manufacture, import or purchase plastic packaging, including goods purchased in plastic packaging, you need to familiarise yourself with the tax and establish if you need to register and account for it.

“We’re working together with industry groups to help businesses understand their obligations and prepare for the tax. There are lots of things that you can start doing now, such as reviewing your records and taking any necessary steps to ensure that you can accurately verify the source and composition of your plastic packaging. You may need to work with other businesses in your supply chain to do this”.

Tax

On April 1 2022, a £200 per tonne tax will be placed on plastic packaging with less than 30% recycled content.

This will apply to UK-manufactured and imported plastic packaging, including packaging that is already filled with goods

HMRC added that it will also include:

  • Plastic packaging that does not contain at least 30% recycled plastic
  • Each plastic packaging component, for example the 30% recycled plastic threshold will apply separately to the lid, label and bottle of a drinks bottle
  • Packaging made of more than one material, where plastic is the predominant material by weight.

Guidance

Today’s guidance explains that for packaging made up of several packaging components, businesses must account for Plastic Packaging Tax on each component.

A packaging component is plastic if it contains more plastic by weight than any other single substance.

For example, if a 10-gram packaging component is made of 4 grams of plastic, 3 grams of aluminium and 3 grams of cardboard, it will be considered to be a plastic packaging component for the purposes of this tax.

Also, things such as bottles, caps and labels are included as they are manufactured separately before being assembled to make packaging units for drinks and liquids.

Exemptions

The tax will apply to the vast majority of producers, but some exemptions to apply.

For example, those businesses that manufacture or import less than 10 tonnes of plastic packaging per year will not need to register.

Silage film was also recently exempted after lobbying from famer groups (see letsrecycle.com story).

Businesses that exceed the 10 tonne threshold will need to register from 1 April even if all their packaging contains 30% or more recycled plastic.

Decision tree

The below decision tree from HMRC outlines if a company’s product will be liable.

You should carry out due diligence checks on your suppliers

  • Judith Kelly, HMRC

Pollution

Ms Kelly added: “Recycled plastic has a carbon footprint than can be up to four times lower than that of virgin plastic – introducing this tax will provide a clear economic incentive for businesses to use recycled plastic in the production of their packaging. This will also ensure we reduce the amount of plastic packaging that ends up in landfill.

“If you are a business that purchases plastic packaging from a UK manufacturer or importer, you should carry out due diligence checks on your suppliers to ensure the tax has been properly accounted for on any packaging you purchase. If you export goods in plastic packaging, you may benefit from sharing information back up the supply chain.”

Useful links

Check if your plastic packaging is in scope of the Plastic Packaging Tax

Check if you need to register and are liable for Plastic Packaging Tax

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