Due to take effect from 1 April 2022, HMRC have published a policy paper detailing how businesses can prepare. Primary legislation is currently before Parliament.
Who is affected?
The tax will apply to plastic packaging manufactured in, or imported into, the UK where the plastic used in its manufacture is less than 30% recycled. The tax will also apply to packaging that contains multiple materials but has more plastic by weight than any other single substance.
If you are a business that manufactures or imports 10 or more tonnes of plastic packaging over a 12-month period you will need to register for the tax (even if you are not eventually liable to pay the tax). This includes importers of packaging which already contains goods (e.g. plastic drinks bottles).
How much is the plastic packaging tax?
£200 per metric tonne of plastic packaging. The online service to register and pay is expected to become available on 1 April 2022.
How can I prepare for the packaging tax?
Businesses should keep records of the packaging they manufacture or import even if it contains more than 30% recycled plastic. If you are a business manufacturing or importing less than 10 tonnes of plastic packaging a year, you will still need to maintain records showing you are below the threshold.
If you pay the tax as the manufacturer or importer of plastic packaging, any invoices to business customers should include a declaration that Plastic Packaging Tax has been paid.
Climate conscious? Can you consider making changes to the packaging you manufacture or import so that they include at least 30% recycled plastic and fall outside the new tax.
Are there any Deferrals or Exemptions?
If goods are for export, a business can defer paying the tax for up to 12 months with no requirement to pay the tax if the goods are exported within that 12-month period. There are some exemptions from the tax, regardless of how much recycled plastic they contain. These include packaging of medicinal products and transport packaging used in the safe delivery of goods into the UK (e.g. – pallet wrap). However, plastic packaging used to transport goods within the UK will be liable for the tax.
Once this becomes law, we can expect more guidance later in 2021. Please contact your usual Menzies adviser if you would like to know more.