How will Plastic Packaging Tax affect you?

The implementation date for the UK’s new tax on plastic packaging is fast approaching, and it is already having a material impact on supply chains.

 As noted in our previous article here, the Plastic Packaging Tax (“PPT”) is targeted at plastic packaging manufactured in or imported to the UK. It comes into effect on 1 April 2022, and affects manufacturers, producers and importers of plastic packaging including overseas businesses.

PPT will arise on a chargeable “packaging component” which is: 

  • produced in, or imported into, the UK in the course of business;
  • contains more plastic than the substance contained in when measured by weight it (e.g., metal, glass, cardboard, which weight must also be measured); and 
  • is finished, having undergone its last “substantial modification” before being packed.  

Businesses will need to register for PPT if they have manufactured or imported 10 or more tonnes of finished plastic packaging components within the last 12 months, or will do so in the next 30 days anytime from 1 April 2022.  From 1 April 2022 to 30 March 2023, the 12 months threshold will be worked out differently.  PPT will then apply to chargeable components which contain less than 30% recycled plastic.

Latest PPT guidance from HMRC

Since our last article, HMRC has been regularly updating its PPT guidance and the final version of the UK’s PPT secondary legislation was published on 8 February.  What has become clear is the importance of due diligence for businesses who may be involved in the supply chain for these components. 

HMRC expects all affected businesses to conduct regular and appropriate due diligence checks on its supply chain to lessen the risk of being involved in a supply chain where Plastic Packaging Tax due goes unpaid.  It has therefore provided guidance on the due diligence checks a manufacturer, importer, and a purchaser of plastic packaging components should request for PPT purposes, depending on whether the components in question contain 30% or more recycled plastic. Such checks include:

  • requesting confirmation from the supplier of the tax status of the plastic packaging components where they do not contain the necessary 30% recycled plastic
  • getting signed documents from suppliers on PPT payments
  • requesting confirmation from customers who have performed the last substantial modification on components
  • getting product specifications including the weight and composition of the components
  • obtaining copies of any certifications or audits conducted on your suppliers, or re-processors of recycled plastic
  • conducting physical inspections or audits on your packaging supply chain to prove information given by suppliers or customers. 

For further examples, please see here.

How our sector clients may be affected

The latest guidance from HMRC demonstrates that the scope of PPT is much wider in scope than may be understood.  Listed below are several examples of affected products.  When conducting due diligence, the key for our clients will be to determine the extent to which PPT will apply to its supply chain and if such tax will be borne downstream.  For further information on PPT including possible exemptions, please see our article here.

Food & Beverage

  • bottles designed for single use (even if they can be refilled and reused)
  • bottle tops or caps
  • labels designed to present the goods and describe the contents of a product
  • trays designed to contain and protect food, such as ready meal trays or takeaway
  • resealable food packaging (such as that sold containing cheese or pasta)
  • film designed to protect produce
  • pots designed to handle and deliver products, e.g.  yoghurt and soup pots (with the lids being separate packaging components in their own right) or for ‘food on the go’
  • wrap designed to group products together for easier handling, such as shrink wrap around canned goods
  • reusable plastic crates designed to deliver fresh fruit or baked goods
  • flexible food pouches and resealable packaging or ready meal and vegetable pouches/packets
  • film windows on items just as sandwich or quiche packets
  • salad bags
  • crisp packets
  • biscuit wrappers
  • pallet wrap
  • plastic film around a box to protect the box and the contents 
  • pick bins used in warehouses
  • tamper proof seals
  • large containers used to import alcohol to be bottled
  • crates that act as primary or secondary packaging, and are used for transporting goods into the UK for delivery to a consumer or supplier (this includes items such as fruit and vegetables)
  • plastic bags (excluding bags for life) including carrier bags, bin liners and refuse sacks, food bags (such as sandwich bags), nappy sacks 
  • disposable pots and tubs, such as yoghurt pots, ice cream tubs, butter and food spreads

Hospitality & Leisure – items as above, and including:

  • liquid soap pumps
  • closures on condiment bottles and jars
  • disposable cups, plastic bowls and plates
  • plates (designed to be sold with food)
  • plastic packs, e.g. which pens and pencils are sold in
  • single use bottles, such as for soft drinks, condiments, cleaning products, hair and beauty products and bath and shower products

Luxury, Fashion & Retail – items as above, and including:

  • clothes and coat hangers designed for use in the supply chain
  • kimble tags designed for labelling or pricing goods
  • Labels are used to present goods
  • gift wrapping such as ribbon and sticky tape
  • single use display shelves and presentation stands
  • transport packaging
  • used to transport goods within the UK
  • manufactured in the UK
  • imported into the UK as goods in their own right
  • used to import a single good into the UK

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