What is the Plastic Packaging Tax, and does it affect you?

Many businesses will have come across mentions of ‘plastic tax’ at some point over the last year, but we are now only days away from this new law coming into force.

1 April 2022 marks the launch of the UK Plastic Packaging Tax, the aim of which is to encourage businesses to include recycled content above 30% in their plastic packaging placed on the UK market, by creating new demand for recycled plastic and forcing a competitive edge through taxation.

The tax will be charged at a rate of £200 per tonne and applies to UK manufacturers and importers of plastic packaging components which contain less than 30% recycled plastic.

HMRC estimate the tax will impact 20,000 businesses, so if you manufacture in the UK or import plastic packaging into the UK, it is key you investigate whether your business is liable. If so, ensure you manage this in line with HMRC requirements. Keep reading below for our top tips on how to do this…

1. Attend our FREE plastic tax update webinar on Thursday 17 March at 10am!

Join our policy and sustainable packaging experts as they discuss the latest plastic tax updates released in late February from HMRC.

The specific, key aims of the webinar include:

• The latest Plastic Packaging Tax developments from HMRC

• A focus on data reporting methods via HMRC’s portal

• Deliver a practical demonstration of likely requirements for Plastic Tax data submission

Click here to register your FREE place on the webinar

2. Check if you need to register for Plastic Packaging Tax

Firstly, if your business manufactures or imports 10 or more tonnes of plastic packaging within a 12- month period, you may need to register for the tax.

Next, review what packaging your business handles and where it comes from to check if your packaging will be subject to the tax – to do this, government guidance is available here

3. Preparing to Register for Plastic Packaging Tax

Liable businesses will be able to register from 1 April 2022 on a new HMRC Plastic Packaging Tax e-portal, which will include providing various company details and an estimate of how much finished plastic packaging you expect to manufacture or import in the next 12 months.

At this point, it is important to take time to assess the impact of the tax:

• From your suppliers

• Within your business

• To your customers

4. How to work out the weight of packaging for Plastic Packaging Tax

For packaging components that you manufacture and import into the UK, you must know the following:

• Weight of packaging components and the total in kilograms

• Percentage of recycled plastic content

These weights are needed to calculate how much tax is due.

Point to note - If you import plastic packaging components already filled with goods, you do not need to include the weight of the goods inside.

5. Record keeping and accounts for Plastic Packaging Tax

It is paramount that businesses can prove their data is correct, so gathering supporting information to evidence your Plastic Packaging Tax return needs to be a key focus. Here are 3 key points to keep in mind:

• Your accounts must show how you’ve worked out the figures you submit on your return

• Your records must show the evidence to support these figures

• Keep records for 6 years from the end of the accounting period

6. Claim a credit or defer paying Plastic Packaging Tax if the packaging is either:

It is worthwhile looking into whether you can defer the liability to pay the tax or claim tax back on your tax return. If your packaging is either of the following, then this may be possible:

• Exported by you or someone else

• Converted into different packaging

7. Consider your due diligence and joint and several liability

Due diligence is the appropriate and reasonable care a business takes when entering relations or contracts with other businesses.

These checks help protect your business if any business you trade with either:

• Avoids, or evades paying Plastic Packaging Tax

• Does not comply with Plastic Packaging Tax requirements

If you do not carry out these checks or keep sufficient records of them, you could be held jointly and severally liable (or secondarily liable) for any unpaid Plastic Packaging Tax.

8. Seek support to manage your liability

Comply Direct provides a consultancy service to support with all the above, to help you understand how plastic tax impacts your business, manage your liability and data reporting, and recommend mitigation options to reduce these effects.

We have in-house experts delivering this offering who are a team of data, policy and sustainability specialists; our strong involvement within the industry as well as direct liaison with government ensures we are in the best position to support affected businesses to manage their liability with ease.

If you have any queries about the plastic packaging tax and/or need support in managing your tax liability, contact our solutions team on 01756 794 951 or email marketing@complydirect.com

Read about our full plastic tax support offering on our website here - https://www.complydirect.com/plastic-packaging-tax-services/

Author: Chris Smith, Sustainable Packaging Leader at Comply Direct Ltd