Everything you need to know about the Plastic Packaging Tax

The Plastic Packaging Tax (PPT), which took effect on April 1, 2022, is the UK's newest environmental tax.

PPT is intended to encourage the use of recycled materials in the manufacture of plastic packaging. 

You might be concerned by this news, so in today's blog article, we'll explain what the new environmental tax is and how it will affect you and your business. In addition to this, we will also highlight some steps you can take now to ensure that you handle the new rules appropriately and in a timely manner. 

What is PPT?
The government is consulting on laws that deal with how the tax is handled, and minor revisions to the PPT legislation were announced in the Autumn 2021 budget. The procedures for weighing plastic packaging components, as well as the standards for keeping, creating documentation of, and estimating recycled content in plastic, are all covered by these laws. 

PPT is extremely broad, and it will apply to completed, filled or unfilled plastic packaging components that include less than 30% recycled plastic. 

If a component includes more plastic by weight than any other product, it is termed a plastic packaging component. If a plastic packaging component has undergone its final significant alteration, it is deemed 'finished.'

What is the purpose of PPT?
According to HMRC (HM Revenue & Customs), the new environmental tax will give a clear economic incentive for many businesses to employ recycled material in the manufacture of plastic packaging, resulting in increased demand for this material and, as a result, increased recycling and collecting of plastic trash which is a better method of being disposed of in a landfill or incinerated.

Who will be liable to pay the new plastic packaging tax?
If a company imports or manufactures plastic packaging or items contained in plastic packaging in the UK, it must register for PPT and pay any tax owed if it exceeds the annual threshold of 10 tonnes of plastic packaging. 

Export packaging, including packaged items, will be eligible for credits. 

This will have an impact on the majority of businesses in the following industries:
  • Manufacturing of packaging;
  • Manufacturing in the industrial sector;
  • Goods for consumers;
  • Retailing on the internet;
  • Pharmaceutical;
  • Chemical;
  • Food and beverages;
  • Cosmetics;
  • Oil.

Are there any exemptions for the PPT?
Regardless of how much-recycled plastic they comprise, four categories of packaging components are excluded from the tax. These are the following: 
  • produced or imported plastic packaging for use in the immediate packaging of a pharmaceutical medication;
  • Imported goods' transportation packing;
  • Packing for aircraft, ships, and trains;
  • components that are set aside or permanently allocated for a purpose other than packing.

Even if the exemption applies, exempt packaging must be considered when determining whether more than 10 tonnes of plastic packaging is created or imported in a 12-month period in order to determine if the business must register for the tax.

How can I prepare my business for the new PPT?
Registration, record-keeping, evidence, and samples are all required. Companies must ensure that they have sufficient proof to defend their filings, such as thorough supply chain due diligence.

To defend and support the tax rulings for components that contain more than 30% recycled content, supply chain due diligence and thorough evidence of recycled content will be required. Even for imported items, this is essential on a component-by-component basis at the manufacturing run level.

To get ready, we recommend that you complete the following: 
  • Conduct an evaluation to determine if and to what degree PPT will be liable;
  • Examine supply chains to see if any efficiencies may be found;
  • Create systems to guarantee that the new record-keeping standards are followed;
  • Determine who will be in charge of PPT compliance;
  • Prepare for new rule training for your employees.

For many company owners, hearing about new tax legislation or adjustments to existing taxes like the plastic packaging tax may be intimidating and stressful. We at Persona Finance realise how challenging these situations may be, therefore we strive to make your business needs as simple as possible by offering you and your company critical remote accounting services. 

This way, you can concentrate on what you do best: running your business, while we take care of your tax requirements. Please contact us at [] for further information about our services.
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