Plastic Packaging Tax – In Depth Guide

HMRC have introduced a new UK-wide Plastic Packaging Tax (PPT) designed to encourage businesses to reduce their use of plastic packaging and increase the use of recycled plastic in packaging. The tax will apply to plastic packaging components that contain less than 30% recycled content. The current rate (applicable from 1st April 2024) is a flat rate of £217.85 per tonne of non-exempt packaging.

As the tax is based on weight, businesses need to keep track of the weight of their plastic packaging components and report this to HMRC on a quarterly basis. PPT will be payable by companies who produce or import plastic packaging components. So businesses need to ensure they are aware of their responsibilities under the tax to avoid penalties.

Businesses can reduce their PPT liability by using more recycled plastic in their product packaging. There are also exemptions available for certain types of packaging, such as packaging which contains human medicine.

The revenue raised from the PPT will be invested in new recycling infrastructure, innovation and research in the UK as part of the government's commitment to achieving net-zero carbon emissions by 2050.
Businesses must take care to ensure they comply with the new tax and reduce their liability. Activities include reviewing their packaging components, sourcing recycled plastic, and ensuring that their reporting processes are in place.

Who is affected by PPT?

Manufacturers and importers of plastic packaging are affected by PPT if they meet the 10-tonne threshold. This includes businesses that manufacture or import packaging made wholly or partly of plastic. It is important to note that the tax does not directly affect consumers or retailers, but businesses in the supply chain may pass the cost on to customers.

Must you register for Plastic Packaging Tax?

The PPT registration threshold is set at 10 tonnes or more of completed plastic packaging components either manufactured or imported within the past 12 months or anticipated to be produced or imported over the next 30 days. The 10-tonne threshold applies to 'finished plastic packaging components' that:
1. Are incorporated in packaging materials predominantly made from plastic, according to HMRC's methodology; and
2. Have undergone their final 'substantial modification' to become packaging, e.g., moulded into shape or pressed into sheets.
If a company imports or manufactures packaging products containing plastic components, the weight of which exceeds the threshold, they will be liable to register for PPT. However, although details for all plastic components of such products must be reported on PPT returns, some of them will not be chargeable to tax.

What are the plastic tax exemptions?

Components which are exempt from tax include plastic components containing at least 30% recycled plastic, components of packaging in direct contact with human medicinal products, packaging which is being re-purposed for non packaging applications or packaging intended for export.

In addition, certain types of products may be exempt from PPT if they are considered to be non-packaging items. For example, if a product is sold in a single-use plastic container that is integral to the product and is not considered to be packaging, then it may be exempt from PPT. Similarly, if a product is sold with a refillable container that is designed to be used multiple times, the initial packaging may be exempt from PPT.
It is important to note that the HMRC guidance for exemptions from Plastic Packaging Tax (PPT) has undergone changes since its inception and is likely to continue evolving. It is crucial to check the current guidance to ensure compliance.
When claiming an exemption, it is mandatory to maintain records that demonstrate the percentage of recycled plastic used and supporting evidence of its usage. The evidence should specify the relevant dates, plastic packaging component(s), and the product line or production run. It should also provide an accurate reflection of the recycled plastic proportion present in the output materials of the recycling process, along with details on the source of the recycled plastic.
In case there are any changes in the materials or specifications used to make a plastic packaging component, separate evidence must be maintained for each specification.

Plastics Packaging Tax reporting and payment schedule

Reporting and payment are made quarterly, and businesses must submit their returns and pay the tax within 30 days of the end of the quarter. Therefore, it is essential for businesses to maintain accurate records and documentation to support their PPT calculations and justify their exemptions.

Do you need a Plastic Packaging Tax Calculator?

Calculating PPT can be a complex task, as businesses must determine the amount of plastic packaging subject to the tax and the percentage of recycled content. In addition, businesses must also account for any exemptions or reliefs they may be eligible for. Given the intricacies involved in PPT calculations, it may be beneficial for companies to seek assistance from professionals or utilise specialised software like PackTotal to ensure compliance.

HMRC Penalties and Enforcement

Failure to register with HMRC, report, or pay the tax can result in penalties and interest charges. Penalties may also apply for inaccurate reporting or record-keeping. It is crucial for businesses to understand their obligations and ensure they comply with PPT requirements to avoid penalties.

Wrap Up

Understanding and complying with the Plastic Packaging Tax can be challenging, but it is essential for businesses to meet their obligations and help tackle the pressing issue of plastic waste. By following this comprehensive guide, companies can better understand the tax, its implications, and the steps required to register, report, and pay PPT. With the recent change in rates and the complexity of calculating PPT, businesses may benefit from seeking professional assistance or using specialised software to ensure compliance. By taking the necessary steps to comply with PPT, UK companies can contribute to a more sustainable future and reduce the environmental impact of plastic packaging.

PPT Compliance and PackTotal

If you're looking for a streamlined solution to help you manage PPT data, PackTotal can help. Our software is designed to simplify the process of PPT calculation, and submission, ensuring you stay compliant with the latest regulations. With PackTotal, you can easily track your plastic packaging components, calculate your PPT liability, and generate accurate returns with just a few clicks. To learn more about PackTotal and how it can help your business, get in touch with our team today.