Commencing April 1, 2022, the UK Government has instituted a new plastic packaging tax. The tax targets plastics products manufactured in or imported into the UK containing less than 30% recycled plastic content.
As a relatively new concept, there are undoubtedly many pressing questions. What companies will be affected by the plastic tax? How much will the plastic tax affect the bottom line?
Overview of the Plastic Packaging Tax
On a high level, the UK Plastic Packaging Tax (PPT) will essentially affect every company that manufactures or imports plastic packaging in the United Kingdom. The tax targets plastics used throughout the supply chain and specifically targets single-use consumer packaging. For a complete list of components included in the PPT, see the breakdown here.
If a company imports or manufactures more than 10 metric tons of plastics, it must register for the tax and report its plastic packaging content. Companies that employ less than 50 people and manufacture or import less than 10 metric tons of plastics are exempt from the tax but are still required to report on their plastic packaging.
The PPT applies to plastic packaging, composed of less than 30% recycled content, imported into or manufactured in the UK. Do keep in mind, a business must still register for the tax, even if all packaging imported or manufactured contains more than 30% recycled content. All plastic packaging that meets the PPT’s outlined requirements will be charged at a rate of £200.00 per tonne.
Interestingly, the tax includes all plastics, even bioplastics (compostable, biodegradable, or oxo-degradable). Another important distinction is if a packaging component is composed of multiple materials but is majority plastic, the tax will include the total quantity of all materials. For example, if a 20 gram packaging component is composed of 8 grams of plastics, 6 grams of cardboard, and 6 grams of aluminum, all 20 grams will be taxed as plastic.
Overall, the tax is designed to catalyze plastic alternatives, prevent the prevalence of single-use packaging, and increase the recycled content used in plastics. In addition, a comprehensive reporting standard is being enforced to determine the acknowledged tax of every company.
The reporting requirement of the PPT will require a high level of analysis and collaboration throughout supply chains. All plastic packaging components must be reported on, even if your business falls below the taxable threshold.
It will be important to check with your suppliers to ensure they have paid the necessary taxes to avoid liability for any unpaid tax. Your business is only required to pay the tax on the plastic packaging which is imported, manufactured, or substantially modified.
If your business imports the plastic components but makes a “substantial modification before the packaging or filling process,” your company will be responsible for the tax. Alternatively, if you only pack and fill the packaging, your company is not responsible for the tax.
A substantial modification is defined as a process “that makes a significant change to the nature of the packaging component, as it alters one of the following characteristics of the packaging component: shape, structure, thickness, and weight.”
Substantial modifications also include printing which is defined as: “Printing is when ink is applied to plastic, usually to provide detail about what will be going in the packaging.” However, the process of labeling, “gluing a label to a tub or heating a shrink film label onto a bottle,” is not defined as a substantial modification.
Companies should begin preparing for the PPT as the reporting requirements are rigorous. It will be essential to understand the nuanced requirements of the tax to ensure your company is not underreporting or unregistered.
Getting Ahead of the Plastic Tax
Ampliphi’s platform creates a seamless reporting experience for brands of all sizes. We can help your company understand the breakdown of your packaging components and prepare the necessary reporting documents.
Take action to make the most of the tax and become a first-mover for environmental stewardship. To learn more about the PPT, how your company can prepare for it, mitigate risks and maximize opportunities to save, contact Ampliphi today.
All information was sourced and analyzed from GOV.UK and the opinions and analysis found in this article should not be considered as legal advisory.