Plastic Packaging Tax:

How your company can prepare!

The plastic packaging tax is a flagship government scheme that has been planned since 2018. Coming into force this April, it is a key part of the government's environmental and sustainability planning.  

As you can tell from the name, it will impose a tax on the manufacture or import of plastic packaging with less than 30% recycled content.  For packaging compromising mixed components ( such as cardboard and plastic), if the weight of the plastic constituent is higher than the other components then the packaging falls within the scope of the tax too.

The tax is charged at £200 per metric tonne of finished packaging, it is important that businesses register ahead of time and a special tax return must be submitted.

The tax will be applied quarterly and is to be paid by the manufacturer or importer, not the customer. Although manufacturers and importers can of course increase their prices to cover the cost of the tax. All other taxes remain chargeable on the goods such as VAT.

The new legislation is set to begin on 1st April 2022.

The tax returns are quarterly, they cover four accounting periods each year.

These are:

● 1 April to 30 June

● 1 July to 30 September

● 1 October to 31 December

● 1 January to 31 March.

If you manufacture or import 10 or more tonnes of plastic packaging within a 12 month period, you may need to register for the tax.

HMRC has published guidance on how to register for PPT – although this cannot be done until 1 April 2022.

Here’s a handful of ways you can attempt to ensure you’re ready for the 1 April 2022 new legislation start date:

● Understand the details of the legislation. Like most taxes, the plastic packaging tax sounds simple on the surface but contains myriad details that can catch out the unwary.

● Switch to recycled materials so the tax doesn’t apply. This is, of course, the intention of the tax.

● Speak to your suppliers. They’ll undoubtedly already be aware of the tax, but they may not know that you wish to avoid it.

● Do a practice run. If the tax applies to you, and you can spare the resources, try applying the details of the tax to a previous quarter.

● Keep an eye on developments on the government’s main plastic packaging tax website.

To discuss any of the information above, or to find out more about how Pierce Accountants can help you prepare for PPT, please get in touch.