Plastic Packaging Tax: The Facts

A Plastic Packaging Tax (PPT) was introduced earlier this year. Partner Kirsty Davey looks at how businesses will be affected by the new measures.

Plastic Packaging Tax (PPT) is an environmental tax designed to encourage businesses to use recycled content in the production and import of plastic packaging. The government’s aim in introducing the tax is to move businesses towards packaging that can be recycled as well as using more recycled plastic in their packaging.

Manufacturers and importers of plastic packaging components that contain 30% or less recycled plastic will be liable for the tax. Unless there is evidence to the contrary, for the purposes of PPT, all plastic is assumed to be not recycled.

Does it affect my business?

You need to register if you expect to import or manufacture 10 tonnes or more of finished plastic packaging components within 30 days or have imported or manufactured 10 tonnes or more of finished plastic packaging components since 1 April 2022.

HMRC have produced helpful guidance on their website that takes you through the various steps to establish whether your business is liable for the tax. If you are then you must register for PPT within 30 days of becoming liable for it. Please note that you must pay the tax on all chargeable components from the day you are liable to register.

Plastic Packaging Tax – GOV.UK (www.gov.uk)

What happens next?

You must keep records and accounts as evidence to support the information you submit in your tax return. Your records and accounts must be kept for at least six years from the end of the accounting period and record weight in tonnes, kilograms, and grams.

Even if you are not required to register, you should keep records evidencing this such as a product specification showing the recycled content of a plastic packaging component and details of any due diligence checks you’ve done in order to claim the exemption.

For full details visit: Records and accounts you must keep for Plastic Packaging Tax – GOV.UK (www.gov.uk)

As part of the implementation of this tax there will be a requirement to include a statement with invoices to show that PPT has been paid. However, this has been delayed with updates to follow via gov.uk. If you are responsible for accounting for the tax, HMRC encourage you to make the PPT you have paid visible to your business customers with a view to working with them to try and increase the amount of recycled plastic they use wherever possible.

If you pay PPT on plastic packaging components that you have manufactured or imported, to help cover the cost of the tax, you can choose to increase the price you charge for that packaging. This is a commercial decision for you as a business which you may or may not choose to pass on to your customers.

Plastic Packaging Tax is only paid once when the packaging component is finished or imported. It is not passed down the supply chain as a separately identifiable charge like VAT. VAT will continue to be payable on the whole price charged for the goods you sell according to VAT rules.

This article is not intended to be taken as advice and we recommend that you speak to your tax advisor should you have any queries.

For more information or help with how this might affect your business, contact Kirsty Davey on 01326 214034 or by email