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Plastics Packaging Tax – Update May 2021

The Government are pushing a new tax on plastic packaging that will come into force in April 2022, driven by HMRC that will apply a tax of £200/t on any plastic packaging that does not contain 30% recycled content. The intention of the tax is to encourage greater recycled content in plastics packaging.

Photo of plastic packaging

Think of it as a new form of VAT. If your business creates plastic packaging or your businesses imports plastics packaging your business will be obliged to register with HMRC and pay the tax if you can not demonstrate that it contains 30% recycled content. Your business will then pass this tax down the packaging chain via an extra line on invoices until it gets to the consumer.

There is an exemption for businesses that create or import less than 10 tonnes of plastic packaging AND less than one tonne contains less than 30% recycled plastic.

If your business makes or imports plastic packaging you will need to keep records to show that you were below the threshold or to demonstrate the recycled content of that plastic packaging.

If you buy plastic packaging that contains less than 30% recycled content you can expect to start to see this new extra line for plastics packaging tax on your supplier invoices. You are expected to add this plastics packaging tax to your invoices when you sell the packaging on (whether it is empty or filled).

If your business will be exporting plastic packaging that was subject to the tax it will be possible to defer the tax, or claim a rebate.

There are 4 exemptions:

  • Plastic packaging that will be in contact with a medicinal product
  • Transit packaging around imported goods
  • Plastic packaging used for international journeys (unless it is released into the UK)
  • Plastic components that are not intended to be used as packaging (ie: the components will not be used for the containment, protection, handling, delivery or presentation of goods)

The guidance talks about components – the individual units that may be used – such as bottles, caps or labels and whether each component has 30% recycled content.

What counts as recycled plastic? – Recycled plastic is plastic that has previously been processed. It can include pre-consumer and post-consumer material that would otherwise have been waste. The definition is fairly open but you cannot use process waste from the same process in which it was generated as ‘recycled content’, so it looks like process waste, offcuts and trimming waste will not be eligible as recycled waste in your own processes. This is something to check once the legislation is passed.

The guidance is heavily reliant upon record keeping because it vis probably impossible to prove whether plastic actually contains 30% recycled content by ‘scientific terms’ (meaning that you cannot test for recycled content in the laboratory).

HMRC has two web pages that may be useful to you:

Is your business ready for plastics packaging tax?

Further information

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