HMRC issues further guidance on Plastic Packaging Tax

HMRC has published some additional information about the types of plastic packaging subject to the Plastic Packaging Tax.

The Plastic Packaging Tax (PPT) is a new tax that will come into force in April 2022. Designed to encourage the use of more recycled plastic, within plastic packaging, the plastic tax will apply to plastic packaging manufactured in, or imported into the UK, that does not contain at least 30% recycled plastic.

The rate of the Plastic Packaging Tax will be set at £200 per tonne of plastic packaging placed onto the UK market.

This latest guidance, in section 2 of Further Information for Businesses, relates mainly to single-use products including carrier bags, sandwich bags and disposable cups. In the update to existing guidance on the new tax, HMRC has provided additional information on when a packaging component is finished.

The further information also provides examples of manufacturing processes that are not considered a “substantial modification” under the legislation, such as for example, gluing a label to a tub or heating a shrink film label onto a bottle.

Alongside these updates to its online guidance, HMRC has published two decision trees for businesses that remain unsure as to whether they are liable to pay the tax. The first enables businesses to check whether the packaging they manufacture, or import, is in scope and the second checks whether they are liable to and need to register for the tax.

The de minimis for Plastic Packaging Tax will be set at 10 tonnes of plastic packaging placed onto the UK market, which is far lower than the current packaging regulations. HMRC’s guidance confirms that businesses that import or manufacture less than the 10-tonne threshold will also be subject to record-keeping requirements to evidence that they have not breached the threshold, meaning they will need to keep records on packaging manufacture and import, even if they are ultimately not liable to pay any tax.

Jimmy Dorrell, Head of Sustainable Busines at Clarity Environmental, said: “With just over six months for businesses to prepare for the Plastic Tax, the pressure is really on now. But there is still much confusion out there, and whilst we welcome this latest guidance, the piecemeal approach to the release of information has made it hard for businesses to get to grips with – particularly those that are not familiar with the current packaging regulations.

“Preparing for the Plastic Packaging Tax is going to require a level of data collection that many businesses may not have considered before. Without adequate systems in place not only does a business risk failing to meet its tax obligations, but it is also likely to see a huge increase in costs. We urge anyone who believes they may be liable for the tax to seek support as soon as possible.”

Get a cost forecast

If your business needs help in understanding and meeting the Plastic Packaging Tax obligations, you can get in touch with our team.