Plastic Packaging Tax in the UK, what is it and how will impact my company?

The Plastic Packaging Tax (PPT) is a tax regulated by UK HM Revenue & Customs (2021 No. 1417) that comes into force on 1st April 2022.

It will apply to your company if:

  • Your company manufactures plastic packaging components in the United Kingdom.
  • Your company imports plastic packaging components into the United Kingdom.

As long as the material is manufactured or imported in 10 metric tonnes or more in a 12-month period and if the proportion of recycled plastic in the component, when measured by weight, is less than 30% of the total amount of plastic in the component.

What are the exemptions?

  • Plastic packaging produced before 1st April 2022.
  • Packaging to be exported from the United Kingdom before 1-year period.
  • Plastic packaging used to handle and transport goods as well as to avoid any transport damage, besides road, rail, ship and air containers.
  • Plastic packaging used in stores for international journeys (goods for use in a ship, aircraft or railway vehicle and includes fuel and spare parts and other articles of equipment, whether or not for immediate fitting).
  • Plastic packaging components made from multiple materials of which plastic is not the heaviest by weight.

And

  • If 30% or more of the plastic used in the component is recycled.
  • Immediate packaging of medicinal products.
  • Plastic packaging permanently recorded as set aside for non-packaging use.

These three last plastic packaging count towards the 10-tonne threshold even though they are not eventually liable to pay it.

Do I have to keep records?

Yes, all companies manufacturing or importing plastic packaging will need to keep records (including businesses that do not reach 10 tonnes per year). Even companies that are exempt from paying PPT will be required to register and hold information supporting the claim of exemption.

Records must include for companies chargeable for PPT:

  • A breakdown of the weight of plastic packaging components finished or imported in each period.
  • Any adjustments or corrections made to the previous accounting period.

And for companies exempt from PPT the following:

  • Evidence of any exemption from the tax or if they are below the threshold.
  • Recycled plastic proportion, if 30% of the plastic used in the component is recycled.
  • The weight of plastic packaging exported outside the UK in the period on which the tax was deferred, a document identifying the components to be exported (such as a sales contract or order) and the date of export.
  • A breakdown of the weight of any plastic packaging for which a credit is claimed if the packaging has been exported or converted into new packaging components, evidence of the export, amount and date of the paid tax, how the tax was paid and, if transformed, proof that the conversion took place.

These records must be kept at least 6 years from the end of the accounting period.

How much and when do I have to pay the tax?

£200 per metric tonne (from a single specification). Quarterly returns will be required.

You must register for the PPT if you have manufactured or imported 10 or more tonnes of finished plastic packaging within the last 12 months or if you plan to do so in the next 30 days, starting counting tonnes from 1st April 2022.

Once you have exceeded the 10 tonnes threshold, you will have to register for the PPT within the next 30 days in an accounting period (monthly) and you must pay the tax on all chargeable components from the day you are liable to register.

Only one company in the entire supply chain of the plastic component should pay the tax, this means that you are only liable to pay for the PPT at the time the plastic component is deemed to be finished or imported.

If you have to register for PPT, you must provide the following information:

  • Business type.
  • Business address and contact details.
  • Date of which your business becomes liable for PPT.
  • Estimation of how much-finished plastic packaging you expect to manufacture or import in the next 12 months.
  • Customer reference number (Corporation Tax Unique Tax Reference, Self-Assessment Unique Tax Reference, Company Reference number, Charity Registration number, National Insurance number or Temporary National Insurance number)

Additional information

If you import packaging using incoterms, you should make sure you and other businesses know who is responsible for accounting for PPT. The tax becomes chargeable when the goods are imported, but is accounted for quarterly in arrears rather than at the time of import.

If your company is a member of a group, you can register as a group to complete returns and make payments on behalf of all members of the group.

Here you can register to receive email alerts for any modification in the PPT.

From Cosmeservice, we encourage you to:

  • Verify the components your products are made of (confirming all different types of plastic).
  • Check if you may be chargeable for PPT.
  • Do a headcount or estimation of tonnes you have manufactured/imported in previous years.
  • Consider more sustainable alternatives for your products where possible.
  • Start keeping the appropriate records.

Let’s create together a better world with a more sustainable environment!

Useful links

https://www.legislation.gov.uk/ukpga/2021/26/part/2/enacted

https://www.gov.uk/government/publications/examples-of-packaging-in-and-out-of-scope-of-plastic-packaging-tax/packaging-in-and-out-of-scope-of-plastic-packaging-tax

https://www.gov.uk/guidance/record-keeping-and-accounts-for-plastic-packaging-tax#export-evidence

https://www.gov.uk/guidance/examples-of-tests-and-calculations-for-plastic-packaging-tax

https://www.gov.uk/guidance/work-out-which-packaging-is-subject-to-plastic-packaging-tax

https://www.gov.uk/guidance/decide-if-you-need-to-register-for-plastic-packaging-tax

Feel free to let us know any doubt you may have regarding this new tax. At Cosmeservice we will be happy to guide your company in the first steps!

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