What does the Plastic Packaging Tax mean for you?

What does the Plastic Packaging Tax mean for you and how can OGL Software help?
August 17, 2021
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5-min read
We are now on the countdown to the introduction of the Plastic Packaging Tax in April 2022. With only a few months to go, how exactly will the tax affect your business?

What is the Tax?

The Plastic Tax is a measure put in place by HMRC as part of the UK's Resource and Waste Strategy to encourage the usage of recycled material in plastic packaging in the UK.

Who will be affected?

From the 7 April 2022, plastic packaging components manufactured in and imported into the UK will be liable for a specific material tax where it does not meet a minimum recycled content of 30% weight. This will only apply to businesses that manufacture or import more than 10 tonnes of plastic packaging in a 12 month period.

How much will the tax cost?

Plastic packaging components where the amount of plastic in the component does not contain 30% recycled content by weight will be charged at a rate of £200 per tonne. If you manufacture or import large amounts of packaging, this could have a significant impact.

Below is a visual example of how the tax applies to different components in a bottle of water:

Are there any exemptions?

Currently, there are two accepted exemptions proposed by HMRC:

  1. Plastic packaging for human medicines
  2. Plastic transit packaging in the form of shrink wrap around imports

Financial Impacts - Direct vs Indirect Taxpayers

The financial impacts of the tax on businesses will depend on whether they are a Direct or Indirect taxpayer:

Direct Taxpayers - These are businesses either importing or manufacturing plastic components, these businesses will have to submit data to HMRC each quarter covering:

  • The amount of plastic packaging manufactured or imported (regardless of its recycled content)
  • The proportion of this material that exceeds 30% recycled content, including evidence of the recycled content
  • The proportion of this material that is exempt from the tax
  • The amount of liable plastic packaging exported (for rebate purposes)

It is expected that Direct Taxpayers will see administrative costs associated with the collection and submission of data to HMRC as well as the £200 per tonne tax cost.

Indirect Taxpayer - These are businesses that handle plastic packaging but do not class as the first liable party in the UK and therefore would not pick up the tax directly.

Indirect taxpayers will likely see the cost of plastic packaging handled increase by the £200 per tonne taxation rate where the recycled content is less than 30%.

How can OGL help you to prepare?

In light of recent projections around steep price increases to UK industry, we have teamed up with packaging compliance scheme, Valpak, to deliver a webinar around the subjects of Extended Producer Responsibility (EPR) and the UK Plastic Packaging Tax. This session is due to take place 10:00 - 11:30 on Wednesday 13 October lead by Valpak Policy Manager, George Atkinson who will cover:

  • An introduction to Extended Producer Responsibility
  • An overview of why the packaging system is being reformed
  • Outlining the likely impacts of EPR and the Plastic Packaging Tax
  • Presenting timelines for expected changes
  • An explanation of the Deposit Return Scheme function
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