£200 per ton rate set for plastic packaging tax

The government has confirmed that the new plastic packaging tax (PPT) will be coming into force 1 April 2022, raising nearly a billion pounds in tax by 2025

Laid out by Chancellor Rishi Sunak in his March 2020 budget, the plastic packaging tax will be charged at a rate of £200 per metric ton of chargeable plastic packaging components of a single specification, and will apply to plastic packaging manufactured in, or imported into the UK.

The tax is expected to raise £670m for the treasury between 2022 – 2026.

Plastic covered by the tax include bioplastics, including biodegradable, compostable and oxo-degradable plastics.

The tax will not be chargeable on plastic packaging which has 30% or more recycled plastic content, or where the packaging is made of multiple materials of which plastic is not proportionately the heaviest when measured by weight.

This includes importers of packaging which already contain goods, such as plastic bottles filled with drinks and where the imported packaging already contains other goods as the tax only applies to the plastic packaging itself.

There will be an exemption for businesses who manufacture and/or import less than 10 metric tons of plastic packaging in a 12-month period. Other key exemptions in the tax are for transit/transport packaging around imported goods and packaging for human medicines.

While the Treasury has allowed scope for the addition of more exemptions, it is expected that the plastic packaging tax list of exempt packaging will remain short.

With significant financial and administrative implications for producers, HMRC says that it is imperative that businesses are able to identify their requirements and responsibilities under the tax so they can properly prepare for its implementation in 2022.

The new tax runs alongside, rather than as a replacement to the current legislation under the Packaging Recovery Note (PRN) System. This means that the cost of this tax will be additional to any PRN obligations producers incur.

The introduction of the plastic packaging tax is designed to encourage the use of recycled rather than new plastic within plastic packaging and will in turn stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.

Ruby Flanagan |Reporter, Accountancy Daily

Ruby Flanagan is reporter on Accountancy Daily. Contact her on ruby.flanagan@croneri.co....

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